Please ensure Javascript is enabled for purposes of website accessibility

Why eBay Stock Dropped Today

By Steve Symington - Updated Oct 24, 2019 at 4:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors weren't impressed by light forward guidance.

What happened

Shares of eBay (EBAY -2.83%) were down 9.6% as of 3:15 p.m. EDT after the e-commerce leader announced reasonably solid third-quarter results but followed with a disappointing forward outlook.

So what

Regarding the former, eBay's quarterly revenue was roughly flat on a year-over-year basis, at $2.649 billion, but would have increased 2% had it not been for the negative impact of foreign-currency exchange. On the bottom line, that translated to adjusted net income from continuing operations of $563 million, or $0.67 per share, up 19% from $0.56 per share in the same year-ago period. By comparison, revenue was within eBay's guidance range of $2.61 billion to $2.66 billion that was provided in July, while earnings arrived well above the company's target for $0.62 to $0.65 per share.

Man's hand holding a white box next to his notebook computer. His other hand is on the keyboard.


eBay interim CEO Scott Schenkel noted the company's third-quarter performance was roughly in line with internal expectations, "while improving the Marketplace experience, creating better customer outcomes, and maintaining momentum in advertising and payments." 

The company's number of active buyers grew 4%, to 183 million this quarter. But revenue from its core Marketplace segment also grew a modest 1% at constant currencies, to $2.1 billion, and gross merchandise volume fell 2% at constant currencies, to $20.5 billion.

Now what

For the current fourth quarter of 2019, eBay sees revenue of between $2.77 billion and $2.82 billion, good for a change in organic currency-neutral growth of negative 1% to positive 1%, with adjusted net income per share of $0.73 to $0.76. Most analysts were modeling earnings near the top end of that range on revenue of $2.85 billion.

In the end, it's clear the market isn't pleased with that outlook. And with eBay up around 36% year to date leading into this report, it's no surprise to see the stock pulling back today in response.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

eBay Inc. Stock Quote
eBay Inc.
$44.38 (-2.83%) $-1.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.