Retail giant eBay is set to release its fiscal Q1 2024 results on May 1, with expectations of mixed results. While revenues are anticipated to surpass consensus estimates, earnings are predicted to fall short. In the previous quarter, the company exceeded street estimates with a 2% year-over-year increase in net revenues to $2.6 billion. This rise was driven by a 33% growth in first-party advertising product revenues and a 2% gain in gross merchandise value, although a small decrease in active buyers had a negative impact on the top line. It is anticipated that this trend will continue in Q1.
Despite the current financial environment, eBay’s stock has seen minimal change, hovering around $50 since early 2021. However, compared to the S&P 500, EBAY’s performance has been lackluster. Returns for the stock were 32% in 2021, -38% in 2022, and 5% in 2023, underperforming the S&P in the latter two years. Amid volatility in the macroeconomic landscape, including high oil prices and elevated interest rates, there are concerns about whether eBay will continue to underperform the S&P in the next 12 months or see a significant improvement.
Analysts forecast eBay’s valuation to be $49 per share, which is 5% lower than the current market price. The company’s revenues grew 3% year-over-year to $10.1 billion in FY2023, driven by a higher take rate but offset by a 1% drop in gross merchandise value. However, there has been some recovery in GMV in the last quarter, with expectations for this momentum to continue in Q1. eBay’s revenues are expected to reach $10.2 billion in FY2024, with net revenues for Q1 2024 estimated to be around $2.45 billion, surpassing the consensus estimate.
In terms of earnings per share, eBay’s adjusted EPS for Q1 2024 is predicted to be $1.11 per Trefis analysis, slightly below the consensus estimate of $1.13. The company’s net income improved from -$1.27 billion to $2.77 billion in FY2023, primarily due to gains on equity investments, offset by higher operating expenses as a percentage of revenues. It is expected that this trend will continue in Q1, with eBay likely to report a revenue-per-share of $20.26 in FY2024. The stock price estimate is based on a revenue per share estimate of $20.26 and a P/S multiple of 2.4x in fiscal 2024, translating to a price of $49, slightly lower than the current market price.
Overall, eBay’s upcoming earnings report is expected to show a mixed performance, with revenues likely to beat consensus estimates, while earnings may fall short. The company has seen stable stock prices in recent years, but has underperformed the S&P 500 in 2022 and 2023. With uncertainties in the macroeconomic landscape, investors are keeping a close watch on whether eBay will be able to turn the tables and deliver strong results in the coming months. As the retail sector continues to evolve, eBay’s ability to adapt and drive growth will be crucial in determining its future performance in the market.
