EBay Projects Lackluster Sales in Sign Covid Bounce May Fade
(Bloomberg) -- EBay Inc. gave a lackluster revenue forecast for the current quarter, suggesting the online marketplace’s growth could slow as more people get vaccinated and return to pre-pandemic habits like traveling and dining out. Shares fell about 2% in extended trading.
Sales will be $2.42 billion to $2.47 billion in the period ending in September, the San Jose, California-based company said Wednesday in a statement. Analysts, on average, estimated $2.49 billion, according to data compiled by Bloomberg. Earnings, excluding some items, will be 86 cents to 90 cents a share, in line with estimates.
Investors are watching sites like EBay for indications about how people are spending their money given mixed stresses on the economy. Higher vaccination rates and reopening businesses like restaurants are making consumers more mobile and less inclined to shop online. But surging cases of the delta variant, renewed mask mandates and some postponed office openings among major employers suggest there could be a pullback that may benefit EBay and other e-commerce companies. EBay shares tumbled two weeks ago after results from Amazon.com Inc. signaled the pandemic bump was fading.
Chief Executive Officer Jamie Iannone, who took over last year, said the company understands consumer behavior is likely to be inconsistent during the current uncertainty over the pandemic.
“Things will change over the course of the year as consumers react to the different variants, but what we’re really focused on is the long-term health of the business,” Iannone said. “The investments that we’re making in the tech-led reimagination, the investments in our EBay stores products, in our mobile products, in search, in payments and advertising -- they’re all seeing the intended impact.”
Iannone is looking to generate more revenue from advertising and payments, businesses that can offset slow growth of the company’s online marketplace. Under pressure from activist investors, EBay also has announced the sales of several business units during the past year.
In the second quarter, sales gained 14% to $2.67 billion, compared with analysts’ average estimate of $2.63 billion. Earnings, excluding some items, were 99 cents a share. Analysts projected 94 cents a share.
EBay ended the quarter with 159 million active buyers, a decline of 2% from a year earlier. Gross merchandise volume, the value of all goods sold on the site, declined 7% to $22.1 billion in the period ended June 30. Analysts predicted $21.8 billion.
The shares declined to a low of $65.58 in extended trading after closing at $68.02 in New York. The stock has gained 35% this year.
EBay also announced it had completed the sale of its classified advertising business to Adevinta ASA for $13.3 billion, including cash and stock. The sale, announced in July 2020, gave EBay a 44% stake in the combined business. But the deal with the Norwegian digital marketplace owner was slowed by regulators, forcing EBay to sell some of its stake to Permira to gain approval. The agreement with Permira, announced last month, cut EBay’s ownership to 33%, the company said in the statement.
In June, EBay said it will sell just more than 80% of its South Korean online marketplace to local retailer E-Mart Inc. for $3 billion. The deal is expected to be completed by the end of the year or early in 2022.
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