eBay’s upcoming fiscal Q1 2024 results are anticipated to show mixed results, with revenues expected to exceed expectations but earnings likely to fall short. The company performed well in the last quarter, with net revenues increasing by 2% year-over-year to $2.6 billion, driven by growth in first-party advertising product revenues and gross merchandise value. However, a slight decrease in active buyers had a negative impact on the top line. This trend is expected to continue in Q1.
Despite the current financial climate, eBay’s stock has shown minimal change, hovering around $50 since early January 2021. However, compared to the S&P 500, which has seen a 35% increase over the past three years, eBay’s performance has been lackluster. Returns for the stock were 32% in 2021, -38% in 2022, and 5% in 2023, indicating underperformance compared to the index. The uncertain macroeconomic environment, including high oil prices and elevated interest rates, raises questions about eBay’s future performance and whether it will continue to underperform the S&P over the next year.
Trefis estimates eBay’s valuation to be $49 per share, which is 5% below the current market price of around $51. The company’s revenues saw a 3% year-over-year growth to $10.1 billion in FY2023, driven by a higher take rate but partially offset by a drop in gross merchandise value. Despite this, the GMV has shown some recovery in the last quarter, and this momentum is expected to continue into Q1, with revenues forecasted to reach $10.2 billion in FY2024.
In terms of earnings per share, eBay’s Q1 2024 adjusted EPS is expected to be $1.11, slightly below the consensus estimate of $1.13. The company’s net income improved significantly in FY 2023, rising from -$1.27 billion to $2.77 billion. This improvement was primarily driven by a gain on equity investments and higher operating expenses as a percentage of revenues. The company is likely to report a revenue per share of $20.26 in FY2024, indicating future growth potential.
Trefis arrives at eBay’s valuation by using a revenue per share estimate of $20.26 and a P/S multiple of 2.4x in fiscal 2024. This translates to a price of $49, which is lower than the current market price. The company’s stock performance in recent years has been mixed, with periods of underperformance compared to the S&P 500. The upcoming fiscal Q1 2024 results will provide further insight into eBay’s financial performance and its future outlook in the evolving market landscape.
