Why eBay Stock Fell



eBay stock fell 0.51%

After eBay (EBAY) reported its 1Q18 results, its stock fell 0.51% to $40.97 on April 25. While the company posted lower-than-expected revenue in the first quarter, its earnings were in line with Wall Street expectations.

Internet peers Twitter (TWTR), Facebook (FB), and PayPal also reported their 1Q18 results. While Twitter and PayPal stock closed 2.4% and 1.7% lower, respectively, Facebook closed flat, at $159.69.

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Earnings meet expectations

eBay posted adjusted EPS (earnings per share) of $0.53 in 1Q18, matching analysts’ expectations. Its earnings improved 9% YoY (year-over-year) from $0.49, and its adjusted net income grew 2% YoY to $548 million.

Revenue misses estimates

eBay generated $2.58 billion in revenue in 1Q18, flat from the sequential quarter and missing analysts’ expectation of $2.59 billion. However, its revenue surged 12% YoY from $2.3 billion. HeBay’s growth was higher than the 8.8% YoY seen in 4Q17 and 8.6% YoY in 3Q17.

Concerns over revenue growth

For the quarter ahead, eBay expects to post adjusted EPS of $0.50–$0.52. The company expects its revenue to grow 6%–8% on a currency-neutral basis in 2Q18, reaching $2.64 billion–$2.68 billion.

Meanwhile, analysts were projecting 2Q18 sales of $2.68 billion, raising concerns about the company’s revenue growth in the e-commerce market, which is dominated by Amazon (AMZN). Brick-and-mortar retailers such as Walmart (WMT) are also adding to the pressure as they enhance their digital-shopping options. In 2018, eBay anticipates adjusted EPS of $2.25–$2.30 and revenue of $10.9 billion–$11.1 billion, representing 7%–9% currency-neutral growth.


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