eBay's Q2 Revenue Forecast Falls Below Estimates; Competition and Inflation Impacting Growth
eBay forecasts Q2 revenue below Wall Street estimates as demand cools for key product categories. Revenue expected to range between $2.49 billion and $2.54 billion, falling short of analysts' average estimate. eBay repositions itself in focus categories and acquires trading cards marketplace to strengthen its presence.
The company attributes this decline to a cooling demand for its key product categories, such as collector's items and auto parts. As a result, eBay's shares experienced a 5% drop in extended trading.
The ongoing impact of inflation has made consumers more cautious about their online purchases, leading to a decline in demand for certain items. Additionally, eBay faces stiff competition from larger platforms like Amazon.com, further impacting its revenue.
For the quarter ending in June, eBay expects its revenue to range between $2.49 billion and $2.54 billion. This projection falls short of analysts' average estimate of $2.56 billion, according to LSEG data. The company also forecasts adjusted earnings per share in the range of $1.10 to $1.15, with the mid-point falling below analysts' estimate of $1.14.
In response to the growing dominance of larger e-commerce platforms, eBay has been repositioning itself in recent years. The company has focused on expanding its offerings in specific categories, such as luxury bags and watches, refurbished electronics, and auto parts and accessories. In 2022, eBay acquired trading cards marketplace TCGplayer for $295 million, aiming to strengthen its presence in the collectible cards category. Additionally, eBay introduced authentication services for luxury and collectible items.
Despite the revenue forecast, eBay's performance in the most recent quarter ended March 31 showed some positive signs. The company reported a 2% increase in revenue, reaching $2.56 billion, slightly surpassing analysts' estimate of $2.53 billion. Moreover, eBay's adjusted earnings per share of $1.25 exceeded analysts' expectations of $1.20.
Gross merchandise volume, a crucial metric indicating the total value of goods and services sold on the marketplace, experienced a modest 1% growth, reaching $18.62 billion.
eBay's active buyer base remained stable, with 132 million active buyers as of the end of March. The company defines active buyers as customers who have made a transaction on eBay within the previous 12-month period.
eBay forecasts Q2 revenue below Wall Street estimates as demand cools for key product categories.
Revenue expected to range between $2.49 billion and $2.54 billion, falling short of analysts' average estimate.
eBay repositions itself in focus categories and acquires trading cards marketplace to strengthen its presence.
Source: REUTERS