- Stock tumbles more than 7% in pre-market trading
- Q4 revenue and earnings likely to miss estimates
- Nips recent share price momentum in the bud
The inflationary pinch on consumers wallets is starting to be felt, judging by Ebay’s (EBAY:NASDAQ) muted growth guidance for the Christmas quarter.
The $20 billion retail platform expects net revenue in the range of $2.47 billion to $2.53 billion, implying a miss of between 3% and 5% to existing analyst consensus of $2.6 billion. Earnings will also struggle to match previous expectations, with consensus pitched at $1.05 per share, at the very top of Ebay’s $1.00 to $1.05 range.
MIXED FORECASTS FOR CHRISTMAS SPENDING
There’s no shortage of consumer spending forecasts doing the rounds as we head towards the key holiday season, and some are more optimistic than others.
The US National Retail Federation, the industry’s main cheerleader, is anticipating a 5% increase in consumer spending this year, but a recent study by Deloitte points to something below that, although the figures are not directly comparable because they include different things.
Accenture’s, among the bleaker outlooks for this Christmas, shows a 5% decline in planned holiday shopping among Americans, while it also found almost two thirds of Brits planning to cut back on spending this Christmas.
MUTED FULL YEAR GROWTH GUIDANCE
As for Ebay, it anticipates full year 2023 net revenue to be between $10.02 billion and $10.08 billion, with earnings per share of $4.17 to $4.22. Wall Street expectations had expected 2023 EPS of $4.15 on revenue of $10.15 billion, and it is clearly disappointing as far as investors are concerned, with the stock plunging more than 7% in out-of--hours trading to $40.77, jamming the brakes on recent momentum.
‘In the face of macroeconomic uncertainty, we continue to make meaningful progress against our ambitious vision to reinvent the future of ecommerce for enthusiasts,’ said Jamie Iannone, chief executive at Ebay.
In the third quarter, Ebay reported adjusted EPS from continuing operations of $1.03, better than the $1 consensus. Revenue for the quarter was $2.50 billion, marking a 5% year-on-year increase, and it was in line with the analyst estimate.
Ebay’s gross merchandise volume in the third quarter reached $18 billion, reflecting a 1.6% increase on Q3 2022, beating estimates of $17.77 billion. The number of active buyers on the platform was 132 million, showing a decrease of 2.2% over last year but still slightly above the consensus of 131.3 million.
