EBay Earnings: What to Watch

By Laura Stevens 

EBay Inc. is scheduled to announce its fourth-quarter earnings after the market closes on Wednesday. Here's what you need to know:

EARNINGS FORECAST:

Analysts polled by Thomson Reuters expect eBay to earn 54 cents per share, compared with adjusted results of 50 cents a year ago. (The company earned 43 cents per share unadjusted.) The company forecast adjusted fourth-quarter earnings of between 52 cents and 54 cents. Analysts are expecting the company to earn $1.88 per share for the total year.

REVENUE FORECAST: Revenue of $2.4 billion is forecast by the analysts, compared with $2.32 billion a year ago. For all of 2016, analysts are forecasting revenue of $8.98 billion, up from $8.59 billion in 2015. EBay expected revenue of between $2.36 billion and $2.41 billion for the fourth quarter.

WHAT TO WATCH:

-- HOLIDAY ADVERTISING: EBay launched a major holiday ad campaign in the fourth quarter, its first to broadcast on TV in the U.S. and Europe since 2014, but did it make a difference? That is likely to be a topic of conversation with executives during the retailer's analyst conference call Wednesday. Morgan Stanley analysts say that "while branded campaigns can take time to have an impact, it is notable that our Google Trends analysis shows very little change in the trajectory of eBay keyword traffic throughout the holiday season." EBay has recently recruited celebrities and others to try to attract new shoppers to its site, trying to shed its legacy image as an online garage sale.

-- COMPETITION: Speaking of the holidays, consumer spending last quarter appears so far to have produced a mixed bag for retailers. Traditional department stores struggled, while Amazon commanded an estimated 40% of total online sales, leaving a smaller market share for its online rivals. Adding to competition for eBay in particular are a number of mobile-only competitors springing up in the space, most of which don't charge listing fees. All of these factors may have had an impact on holiday sales, and Wednesday's earnings should shed some light on the overall industry.

-- SEARCH: Analysts will be looking for eBay to show growth in gross merchandise volume -- the value of items sold on the site -- on the back of platform changes its made to help facilitate search and to give it higher rankings in search engine results. Grouping listings together by category allow users to more easily search for items -- instead of finding millions of single results. Analysts have said that they expect those results to pay off in coming quarters.

Write to Laura Stevens at [e-mail]

(END) Dow Jones Newswires

January 25, 2017 08:14 ET (13:14 GMT)

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