How Did eBay Perform In Q4?

eBay (NASDAQ:EBAY) reported its Q4 results on January 29. While the company beat consensus estimates on revenue, the company’s worsening metrics in the holiday quarter are a bit of a concern. Still, we are maintaining our price estimate of $37 per share for eBay, which is around 10% higher than the current market price. Our interactive dashboard on eBay’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

Some key takeaways from eBay’s Q4 are below:

• Active buyers grew to 179 million (+4% y-o-y) versus 5% growth in Q4 last year
• Gross merchandise volume grew to $24.6 billion (+1% y-o-y) versus 10% growth in Q4 last year
• Marketplace transaction revenues grew to $1.98 billion (+9% y-o-y), of which 64% came from international (vs. 62% a year ago)
• StubHub transaction revenues grew to $311 million (+2% y-o-y), of which 6% came from international (vs. 6% a year ago)
• Total transaction revenues grew to $2.295 billion (+8% y-o-y), of which 56% came from international (vs. 54% a year ago)
• Marketing revenues from the marketplace declined to $316 million (-5% y-o-y), of which 53% came from international (vs. 53% a year ago)
• Marketing revenues from classifieds grew to $263 million (8% y-o-y)
• Total marketing revenues grew to $582 million (+1% y-o-y), of which 74% came from international (vs. 73% a year ago)
• Total revenue grew to $2.88 billion (+6% y-o-y)

While some of eBay’s operational metrics have seen some deceleration, which is a concern, the company’s decision to initiate its first ever dividend seems to have pleased investors. However, it should be noted that this newfound focus on shareholder returns could be a corollary of activist investor Elliott Management buying a stake in the company.

In addition to laying out plans for growth, eBay’s management notes that 2019 is likely to be a year of consolidation, which will drive growth in 2020. The company’s plan over the next two years looks like a familiar narrative to other companies in which Elliott has invested, so it remains to be seen how that will develop. In fact, with Elliott coming in, management may be forced to think more actively about its portfolio realignment (such as potential divestments of Classifieds or StubHub).

Do not agree with our forecast? Create your own price forecast for eBay by changing the base inputs (blue dots) on our interactive dashboard.