eBay Stock To Meet The Revenue Expectations In Q4
eBay (NASDAQ: EBAY) is scheduled to report its fiscal Q4 2022 results on Wednesday, February 22, 2023. We expect the stock to edge past the consensus estimates of earnings, while revenues will remain in line (just below) with the expectations. The company reported mixed results in the last quarter. Its top line declined by 5% y-o-y to $2.4 billion, mainly due to a decline in website traffic and weakness in international markets. Notably, the website traffic suffered in 2022 due to the normalizing of consumer behavior, in comparison to the levels seen during the Covid-19 pandemic. Further, the key metric – Gross Merchandise Volume (GMV) decreased 11% y-o-y in Q3. We expect the same trend to follow in the fourth-quarter results.
Our forecast indicates that eBay’s valuation is $51 per share, which is 2% above the current market price of around $50. Our interactive dashboard analysis on eBay’s Earnings Preview has more details.
(1) Revenues expected to be in line with the consensus
eBay’s revenues decreased by 7% y-o-y to $7.29 billion in the first three quarters of 2022. The drop was driven by lower website traffic, leading to a decline in net transaction revenues. Notably, the key metric – gross merchandise value (GMV), fell by 16% over the same period. We expect the same trend to drive the fourth-quarter results. Overall, eBay’s revenues are estimated to touch $9.74 billion in FY2022.
Trefis estimates eBay’s fiscal Q4 2022 net revenues to be around $2.455 billion, in line with (just below) the $2.46 billion consensus estimate.
(2) EPS to marginally beat the consensus estimates
eBay Q4 2022 adjusted earnings per share (EPS) is expected to be $1.08 per Trefis analysis, 2% above the consensus estimate of $1.06. The company’s adjusted net income decreased from $11.64 billion to -$1.9 billion in the first nine months of 2022. It was primarily due to an increase in loss on equity investments and warrants in 2022, coupled with a one-time gain of $10.5 billion from discontinued operations in 2021. We expect the fourth-quarter results to be on similar lines.
(3) Stock price estimate is 2% above the current market price
We arrive at eBay’s valuation, using a revenue per share (RPS) estimate of around $16.02 and a P/S multiple of just above 3x in fiscal 2022. This translates into a price of $51, which is 2% more than the current market price of close to $50.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
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