EBay stock jumped in Wednesday trading after the e-commerce marketplace reported better-than-expected fourth quarter results. After a rough stretch that included layoffs to start the year, eBay said it expects stronger growth in 2024.
EBay reported Tuesday that it earned an adjusted $1.07 per share on sales of $2.56 billion for the fourth quarter. On average, analysts projected the San Jose-based company would post adjusted earnings of $1.03 per share on sales of $2.51 billion, according to FactSet. The company also said it would increase its dividend by two cents per share, to 27 cents, as well as repurchase an additional $2 billion in stock.
That was enough to boost the stock despite earnings that were roughly flat from a year earlier and a mere 2% year-over-year sales increase. On the stock market today, eBay stock is up 7% at 47.55 in morning trades.
Outlook For Q1 2024
For the current quarter, eBay guided for revenue of $2.5 billion to $2.54 billion. Analysts were projecting $2.53 billion in sales for eBay in the March-ending quarter ahead of the report, according to FactSet. EBay also projected adjusted earnings per share of $1.19 to $1.23 for the first quarter, ahead of consensus.
Meanwhile, the company's gross merchandise volume for Q4 increased 2% to $18.6 billion. That was ahead of expectations of $18.1 billion.
"Our organic GMV growth improved year over year during each quarter of 2023, while navigating a challenging macroeconomic environment," Chief Executive Jamie Iannone said in the news release. "Our results demonstrate the strength of our strategy, and I'm proud of our accelerated pace of innovation as we work to fundamentally enhance the customer experience on eBay."
Further, the company projected its gross merchandise volume will return to currency-neutral growth in the second half of this year.
EBay Stock: Focused On Strong Categories
Prior to its jump Wednesday morning, eBay stock had advanced just 1% total for 2024 and was down about 3% over the past 12 months. Facing stiff competition from Amazon, Walmart and others, eBay stock has significantly trailed the 27% growth for the S&P 500 over the past 12 months.
The company in January laid off roughly 1,000 employees.
Meanwhile, eBay hopes to leverage generative artificial intelligence to create tools to help sellers. For example, eBay last year launched a tool called magical listing that auto-populates text for sales pages based on an image of the product.
Also, eBay has strategized around core focus categories, including luxury handbags and watches and jewelry.
"We continue to like focus categories and better cost management despite some EU macro weakness in early '24," wrote Piper Sandler analyst Thomas Champion in a Tuesday client note. "Investments should drive GMV growth in (second half of 2024)."
Following what Champion described as a "solid" Q4 report, Piper Sandler reiterated a positive overweight rating for eBay stock, with a price target of 52.
Ad Business Grows
Meanwhile, eBay is seeing strong growth selling advertisements on its website. The firm's total advertising revenue grew 20% year over year to $393 million for the December-ended quarter, the company said. The company collected $1.4 billion in total 2023 ad revenue, up 25% from 2022.
Mizuho analyst James Lee wrote to clients that eBay's "monetization of advertising remained on a positive trajectory with more room to go." Mizuho reiterated a neutral rating and upped its price target for eBay stock to 44 from 40.
Iannone told analysts Tuesday that eBay expects "continued momentum" for first-party advertising in 2024. That's despite coming up against a tough comparison in 2023's growth rate. First-party ads, such as promoted listings, represented the majority of advertising revenue, at $368 million for the December quarter.
Technical Ratings For eBay Stock
Coming into the report, eBay stock had an IBD Composite Rating of 71 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating to give an overall view of a stock's performance.
Further, eBay's IBD Relative Strength Rating was 39 out of 99. The rating compares a stock's price movement over the last 52 weeks with that of others in IBD's database.
In addition, eBay stock had an Accumulation/Distribution Rating of B, which indicates more institutional buying than selling of shares.
