eBay Shares Slump Over 6% as Q2 Earnings Forecast Disappoints

US e-commerce giant eBay’s shares slumped over 6% in extended trading on Wednesday after the eCommerce leader for physical and digital merchandise forecast earnings less than what Wall Street had expected for the second quarter of 2021.

The San Jose, California-based company forecasts diluted non-GAAP earnings per share (EPS) in the range of $0.91 – $0.96 for the current quarter, below Wall Street’s consensus estimates of $1.02 per share. The company’s revenue is expected to be in the range of $2.98 – $3.03.

Following this, eBay shares slumped over 6% to $58.50 in extended trading on Wednesday.

However, in the first quarter of 2021, the company reported non-GAAP EPS per diluted share of $1.09 on revenue of $3.03 billion, which beat analysts’ EPS expectations of $1.08 on revenue of $2.97 billion, respectively.

eBay has also declared a cash dividend of $0.18 per share of the company’s common stock.

Analyst Comments

“The company guided below the Street. My 2022 EPS number is still much higher than the Street but for now that’s not going to be investor focus. This year the company gave a lower Q2 than Street guide and talked about a challenged back half as people get out more. So, I don’t think investors will swivel and look at the 2022 potential just yet,” noted Chaim Siegel, equity analyst at Elazar Advisors.

“2022 EPS of $7.15 potential with brining payments in-house so 14x $7.15 is almost 70% 12-month upside potential. But again, the focus won’t be next year when the company’s talking about headwinds in growth rates this year.”

eBay Stock Price Forecast

Twenty-one analysts who offered stock ratings for eBay in the last three months forecast the average price in 12 months of $71.67 with a high forecast of $84.00 and a low forecast of $62.00.

The average price target represents a 15.00% increase from the last price of $62.32. Of those 21 analysts, ten rated “Buy”, 11 rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $63 with a high of $79 under a bull scenario and $45 under the worst-case scenario. The firm gave an “Equal-weight” rating on the e-commerce corporation’s stock.

eBay has shifted its strategy to focus on non-new, in-season, refurbished, collectible goods and continues to repurchase shares. New growth drivers, such as Promoted Listings and Payment intermediation (to be rolled out 2021) are on track,” noted Brian Nowak, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Evercore ISI raised the stock price forecast to $66 from $65. Credit Suisse lifted the target price to $78 from $76. Piper Sandler increased their price target to $75 from $66 and gave the stock an “overweight” rating.

Moreover, DA Davidson increased their price target to $80 from $67 and gave the stock a “buy” rating. Barclays increased their price target to $84 from $82 and gave the stock an “overweight” rating.

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