Coverage: EBay stock drops amid business transformation

Online shopping market eBay reported earnings that beat analyst expectations, but its stock price fell 8 percent in after-hours trading as it continues to move toward becoming more of a competitor to Amazon.

Laura Stevens of The Wall Street Journal had the news:

EBay reported revenue grew 5.6% to $2.22 billion, beating analyst expectations for a third straight quarter of sales gains—signs that the company’s new e-commerce strategy is starting to pay off.

Still, it appeared some investors were disappointed with the company’s outlook, as shares fell 8% in after-market trading after closing earlier at $32.52.

EBay is trying to redefine itself to capture new, younger consumers who shop on their phones and don’t have time to scroll through thousands of listings. It is rolling out improved search features and personalized recommendations and reviews. A new ad campaign stars a supermodel, and wine is now available.

EBay should have already shed its old-school reputation, the company says: 80% of the items on the site are new, and 86% are sold at a fixed price. But it faces stiff competition from Amazon.com Inc. as well as traditional retailers that now excel in e-commerce.

Akin Oyedele of Business Insider reports investors were unhappy with EBay’s guidance:

The ecommerce company said it expects adjusted earnings per share from continuing operations to be in a range of $0.52 to $0.54 for the crucial holiday season. That was near the low end of analysts’ forecast for $0.54, according to Bloomberg.

Also, gross merchandise volume (GMV) — a key measure of the dollar value of everything sold on eBay — slightly trailed analysts’ forecasts. Third-quarter GMV totaled $20.1 billion, representing 5% growth from the same quarter in the previous year when the impact of foreign-currency fluctuation is excluded, but less than the $20.3 billion that was expected.

The online retailer’s net revenue totaled $2.22 billion versus $2.19 forecast. Adjusted earnings per share (EPS) from continuing operations was $0.45, one cent more than the median forecast.

eBay shares had gained 18% this year through the close of trading on Wednesday.

Katie Roof of TechCrunch looked at how EBay is expanding its operations:

The company has been doubling down on its marketplace business since spinning off PayPal last year. In particular, eBay has become “more Amazon-esque,” says James Cakmak, analyst at Monness Crespi Hardt. They have expanded their fixed-price merchandise business to offset their shrinking auctions section.

EBay owes some of its recent growth to its “structured data” initiative, which basically means they are tagging keywords to items to improve search engine optimization and make things easier to find on the website.

“We continued to transform the shopping experience on eBay, delivered more personalization capabilities and began to activate our updated brand messaging,” said CEO Devin Wenig, in a statement.

They’ve also been expanding StubHub, their platform for sports and concert tickets. With $1.1 billion in GMV, a 23 percent year-over-year increase, “StubHub is the biggest growth engine for the company,” noted Cakmak.