Why eBay Shares Are Diving Post Q3 Earnings

eBay Inc EBAY shares are trading lower by around 6% after it reported Q3 FY23 earnings.

Revenue rose 5% Y/Y on reported and FX basis to $2.500 billion, marginally missing the consensus of $2.502 billion. 

EBAY's first-party advertising products posted revenue of $345 million in Q3 (+39% Y/Y on an as-reported basis and +36% Y/Y on an FX-Neutral basis) led by Promoted Listings.

Total advertising offerings generated around $366 million in revenue in Q3, representing about 2.0% of GMV.

Gross Merchandise Volume of $18.0 billion, up 2% on an as-reported basis and roughly flat on an FX-Neutral basis.

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Adjusted operating margin fell to 26.4% from 28.9% a year ago.

Adjusted EPS of $1.03 beat the consensus of $1.00.

Operating cash flow came in at $862 million, with free cash flow from continuing operations of $777 million.

As of September 30, 2023, cash and cash equivalents and non-equity investments portfolio totaled $5.4 billion.

Dividend: The Board of Directors declared a dividend per share of $0.25, payable on December 15, 2023, to stockholders of record as of December 1, 2023.

In Q3, the company repurchased $651 million of its common stock and had approximately $1.7 billion repurchase authorization remaining as of September 30, 2023.

Outlook: In Q4, EBAY expects revenue and adjusted EPS of $2.47 billion - $2.53 billion (vs. consensus of $2.45 billion) and $1.00 - $1.05 (vs. $0.99 street view).

EBAY projects revenue and adjusted EPS of $10.02 billion - $10.08 billion (vs. $9.57 billion street view) and $4.17 - $4.22 (consensus of $3.92).

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Price Action: EBAY shares are down 7.58% at $37.68 premarket on the last check Wednesday.