eBay (EBAY), the leader in online auctions is scheduled to release FQ2 ’15 results after the market close tomorrow. Currently, Estimize has 78 estimates for eBay, with an EPS consensus of $0.73 compared to Wall Street which predicts EPS of $0.72. Similar to EPS, the Estimize community forecasts a higher revenue number of $4.497B relative to Wall Street which has assumed a figure of $4.484B.
eBay’s stock is holding up well this year despite some big name Chinese online retailers having experienced some considerable falls. Alibaba (BABA), in particular has suffered a 30% fall since its peak in November 2014. Year-to-date (YTD) eBay has appreciated 13.42% relative to the NASDAQ which has appreciated 7.98%.
eBay’s stock has rallied in anticipation of the upcoming spin-off of their PayPal business which is scheduled to be completed July 17. The spin-off will yield eBay shareholders with one PayPal share for each eBay share owned. The excitement surrounding PayPal has been growing rapidly causing the valuation to escalate to over $37.40 a share. This spin-off is certainly driving up the value of eBay shares leading into the result.
Uncertainties still remain over eBay’s troubled marketplace division which is currently facing some headwinds due to a change in algorithms used by the search engine Google. The market place division’s total revenues fell by 4% in FQ1 ‘15. Once PayPal is spun-off from eBay, investors may be concerned that the two remaining businesses within eBay may be in deterioration. To date, eBay has done a good job of maintaining healthy margins relative to its competitors such as Amazon, however eBay’s revenue growth has lagged significantly.
When eBay reports tomorrow, investors will be eager to hear more details regarding the PayPal spin-off and also management’s strategy for the remaining eBay businesses moving forward.
Don’t forget to place your estimate for eBay before they report here.
(Photo Credit: Cheon Fong Liew)