eBay Q2 Preview: Improving Buyer Base Should Have Driven GMV Growth

eBay (NASDAQ:EBAY) is slated to report its Q2 results on July 17. In its Q1, the company had beat consensus expectations on total revenue ($2.64 billion, +2% y-o-y) and earnings ($608 million, +11% y-o-y).  While eBay’s gross merchandise value (GMV) had declined, the company’s management highlighted the growth in user base, and believed that if its active buyers continue to trend up, financial metrics should follow.

Per Trefis, eBay shares have a fair value of $39, which is around the current market price. Our interactive dashboard on eBay’s Earnings outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on the company. Additionally, you can see all Trefis technology company data here.

A Quick Look At eBay’s Revenue Sources

eBay is an online commerce platform and makes money through online advertising and commission income on product sales. eBay has two revenue segments, which totaled $10.5 billion in 2018.

• eBay Marketplaces ($8.1 billion in 2018 revenue, contributed 78% to total revenue): Segment revenues are derived from commission of product sales.
• Marketing & Advertising ($2.3 billion in 2018 revenue, contributed 22% to total revenue): Segment revenues are derived from listing fees and advertising income.

eBay’s revenue trends

• eBay Marketplaces revenue reached $8.2 billion in 2018 from $7 billion in 2016, increasing by $1.1 billion at a CAGR of 7.7%. Q1 2019 revenues reached $2.1 billion (4.2% y-o-y). We expect Q2 2019 revenues to reach $2.2 billion (4.1% y-o-y). We further estimate 2019 revenues are likely to reach $9.2 billion (12.3% y-o-y).
• Marketing & Advertising revenue reached $2.3 billion in 2018 from $1.9 billion in 2016, increasing by $0.4 billion at a CAGR of 9.9%. Q1 2019 revenues reached $0.5 billion (-3.9% y-o-y). We expect Q2 2019 revenues to reach $0.5 billion (-3.9% y-o-y). We further estimate 2019 revenues are likely to reach $2.4 billion (4.5% y-o-y).
• Total revenue reached $10.5 billion in 2018 from $9 billion in 2016, increasing by $1.5 billion at a CAGR of 8.2%. Q1 2019 revenues reached $2.6 billion (2.4% y-o-y). We expect Q2 2019 revenues to reach $2.7 billion (2.4% y-o-y). We further estimate 2019 revenues are likely to reach $11.6 billion (10.5% y-o-y).

We forecast eBay’s EPS figure for full-year 2019 to be $2.37. Taken together with our forward P/E multiple of 16x for the company, this works out to a $39 per share price estimate for the company’s stock, which is around the current market price.

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