eBay Reported An Amazing Quarter, But Is It Enough?

Despite initial weakness following its most recent earnings report, shares of eBay Inc EBAY are up 5% in the past week, and the stock is slowly but surely approaching all-time high territory. Here's what the company had to say about its first quarter. 

Mixed Q1 Results

With surging demand that resulted in active buyers up to 174 million in the wake of COVID-19, and despite a dodgy supply, eBay exceeded analyst estimates earnings per share, while slightly missing the estimate on revenue. EPS came in at $0.77 vs a $0.72 estimate, while revenue was $2.37 billion vs a $2.38 billion estimate.

The revenue figure was a 2% decline from a year ago, while net income dropped to $485 million from $516 a year ago. The board has declared a cash dividend of $0.16 per share for June 19.

eBay's main business, Marketplace, generated $2.1 billion of revenue (down 1%), while Classifieds revenue amounted to $248 million (down 3%). 
Outlook

The company did provide investors with some forward-looking guidance. eBay expects adjusted earnings of $0.73-$0.80 per share on revenue of $2.38-$2.48 billion in the second quarter. Just like the Q1 earnings, the EPS figure came in above consensus estimates, while the revenue figure was in-line with expectations.

The e-commerce platform is on a long-term improvement path as it plans to handle the payment process for transactions itself and it will no longer rely on PayPal PYPL. This is still a relatively small part of eBay's pie, as it accounts for a mere $3 billion of gross merchandise volume from more than 32,000 sellers. But eBay is expanding its payments business to the U.K., Canada, and Australia in July.

Competitors

With eBay out of the ticketing business thanks to its well-timed $4 billion sale of Stubhub, it is more closely lined up with other e-commerce plays like Amazon.com Inc AMZN and Etsy Inc ETSY.

While Amazon is different in many ways, it's almost impossible to mention one without comparing it to the other in terms of e-commerce. The main difference between the two in their e-commerce operations is eBay remains the preferred choice for selling used items through its auction system, while Amazon is the preferred choice for retailers.

Etsy is perhaps the only viable alternative to eBay, but only when it comes to handmade items. It also broke records, as its sales doubled in April compared to the same period last year, and are 25% higher than its prior record that was in December last year.

There is also an international alternative to eBay, Rakuten Inc RKUNY, the so-called "Amazon of Japan." With nearly 90% of Japan's internet users registered on the platform, Rakuten is ranked among the top three e-commerce companies in the world. The massive operator of online shopping malls even started selling COVID-19 test kits and is also seeing a growing thirst for online retail.

In China, Alibaba Group Holding Limited BABA has maintained its dominance. While a large majority of their seller base is in Asia, they serve sellers across the entire globe, and the company will be investing heavily in cloud services due to the outbreak-triggered demand. Between their expansion and the continued online expansion of companies like Walmart WMT and Target Corporation TGT, the fight for the e-commerce pie is getting hotter than it's ever been.

This pandemic has only accelerated a digital revolution. And although eBay is doing well enough amid this uncertainty, the competition is as intense as ever and eBay will need to work hard to keep up and stay relevant in the post-COVID-19 era.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be sent to ivana@iamnewswire.com

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