Please ensure Javascript is enabled for purposes of website accessibility

Like Other E-Commerce Companies Amid the COVID-19 Pandemic, eBay Is Seeing a Surge in Demand

By Evan Niu, CFA – Updated Jun 5, 2020 at 5:38PM

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

eBay boosts its guidance as the pandemic drives online orders.

E-commerce is one of the few sectors that has remained relatively resilient in the face of the coronavirus pandemic, as consumers have shifted purchasing behavior toward online platforms in lieu of going to a local brick-and-mortar retail store: Prominent players like Amazon.com and Shopify have been reporting surges in demand on their respective e-commerce platforms.

Not surprisingly, eBay (EBAY 3.90%) is also seeing higher sales.

Exterior of eBay headquarters

Image source: eBay.

Both buyers and sellers are flocking to eBay

The online auctioneer boosted its guidance for the second quarter, sending shares higher to briefly set a new record for the 25-year-old company. On eBay's first-quarter earnings call in April, management had already observed an "initial surge" following stay-at-home orders implemented in March, with that momentum continuing throughout April.

With the business continuing to perform better than eBay's expectations, the company is now increasing its outlook for numerous key metrics. Gross merchandise volume (GMV) is expected to jump 23% to 26% in the second quarter, and the platform saw 6 million new and reactivated buyers added over the past two months. For reference, GMV in the year-ago quarter was $21.5 billion, so the revised outlook suggests GMV of $26.4 billion to $27.1 billion.

It's not buyers flocking to eBay. Tens of thousands of small business sellers have set up shop, thanks in part to eBay's "Up & Running" accelerator program that was launched in early April to streamline the sign-up process for new sellers and waive selling fees for new businesses. eBay also has other initiatives to support existing sellers that may be struggling during COVID-19.

Certain product categories like home furnishings, electronics, collectibles, and fashion, among others, are "accelerating significantly," according to eBay. Revenue from classifieds is also trending higher, particularly with automotive subscription revenue as car dealerships are starting to reopen in various markets.

With just about a month left in the quarter, eBay is providing the following guidance:

Metric

Prior Guidance

New Guidance

Revenue

$2.38 billion to $2.48 billion

$2.75 billion to $2.8 billion

Adjusted earnings per share

$0.73 to $0.80

$1.02 to $1.06

Organic FX-neutral YOY growth

2% to 6%

17% to 19%

Data source: eBay. FX = foreign exchange. YOY = year over year.

eBay believes that there's a good chance it will top its full-year outlook, but is not formally updating its forecast for 2020 quite yet. The e-commerce tech company will provide more detail regarding its 2020 guidance when it reports second-quarter earnings "after evaluating business dynamics in June."

The current full-year guidance calls for revenue of $9.56 billion to $9.76 billion with adjusted earnings per share of $3 to $3.10.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Amazon and Shopify. The Motley Fool owns shares of and recommends Amazon and Shopify. The Motley Fool recommends eBay and recommends the following options: long January 2021 $18 calls on eBay, short January 2021 $37 calls on eBay, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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.
EBAY
$38.67 (3.90%) $1.45

*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
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

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.