Financial Trading Blog
Stock of the day 20/01/2015 – eBay Inc
After a relatively stable 2013, eBay opened the year at $54.88, and soon reached an all-time high price of $59.79 on the last day of February. Unfortunately for the company, share prices soon began to retrace their steps, reaching $49.58 in June only to have this low bested by hitting $46.38 in October following a disappointing Q3 2014 release. eBay’s stock managed to recover after this plunge, and closed out the year at $56.28. However, in the lead up to its latest quarterly release this week, eBay has slipped back down to $53.89 in anticipation of the results.
eBay’s choppy year has largely been due to collapsing sales growth, which fell from 11% in Q1 to 9% in Q2 to 6% in Q3. The company will be looking for a Christmas bump with its fourth quarter announcement, but given the trend the data has settled in to, alongside the difficulties retailers have had over this Christmas period, eBay may be left wanting. The company also suffered from changes to Google’s search engine optimization rules, causing a reduction in traffic to the site that may have had an impact on this sales growth slowdown.
The company does have one ace in the hole; since eBay acquired Paypal in 2002 the service has only grown, and is set to be spun off into its own separate public company at some point within the year, largely expected to be in Q3 2015. Paypal is expected to post upwards of 20% growth in revenue this quarter, compared to eBay’s stagnating Marketplace. However, even this aspect of the company isn’t impervious to issues, as the growth of Apple Pay is providing a significant rival for the e-commerce business.
In Q3 2014 eBay missed expectations of $4.37 billion to post actual revenue of $4.35 billion, but beat EPS estimates by a cent to reach $0.68. For this quarter, analysts have an average expectation of $4.94 billion in revenue alongside $0.89 per share. However, the company itself has provided guidance of$4.85-4.95 billion in revenue with EPS of $0.73-0.76; the discrepancy between these two sets of figures may go against eBay in the event that the company’s expectations prove more accurate tomorrow afternoon.
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