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Why eBay Stock Popped Today

What happened

Shares of eBay (NASDAQ: EBAY) were up 5.5% as of 11:00 a.m. EDT Thursday after the online marketplace announced better-than-expected second-quarter results, raised its full-year earnings guidance, and confirmed it's mulling whether to sell its StubHub and Classifieds businesses.

On the former, eBay's quarterly revenue climbed 1.8% year over year to $2.687 billion -- near the high end of guidance for between $2.64 billion and $2.69 billion -- and adjusted earnings increased 10.5% to $589 million. With the help of eBay's massive stock buybacks over the past year, adjusted earnings per share rose 28.3% to $0.68, well above its target range of $0.61 to $0.63.


So what

"We remained focused on building our active buyer base, delivering outstanding customer experiences, and accelerating our growth initiatives in the second quarter," added eBay CEO Devin Wenig.

To be sure, eBay's active buyer base grew 4% to 182 million, its new payments platform saw gross merchandise volume increase 24% from last quarter to $270 million, and revenue from more than 940,000 sellers now using its new first-party advertising platform (up from 800,000 last quarter) grew 130% year over year to $89 million.

eBay also used its earnings press release to confirm recent reports that it's "actively reviewing the role of StubHub and Classifieds [...] to determine the best path forward to maximize shareholder value."

Now what

Looking ahead to the full year, eBay told investors to expect 2019 adjusted earnings per share of $2.70 to $2.75, up from $2.64 to $2.70 previously. On the top line, it now sees 2019 revenue arriving between $10.75 billion and $10.83 billion, which technically represents a reduction from its old range (of $10.83 billion to $10.93 billion), but essentially marks a reiteration of its estimate for organic currency-neutral growth of 2% to 3%.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has the following options: short October 2019 $37 calls on eBay and long January 2021 $18 calls on eBay. The Motley Fool recommends eBay. The Motley Fool has a disclosure policy.


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