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eBay Short

by SignalFactory   ·  February 23, 2022 | 10:30:26 UTC  

eBay Short

by SignalFactory   ·  February 23, 2022 | 10:30:26 UTC  

eBay (NASDAQ: EBAY) is scheduled to announce Q4 earnings results on Wednesday, February 23rd, after market close.

For the fourth quarter, the company expects net revenues of $2.57-$2.62 billion. On an FX-neutral basis, year-over-year growth in revenues is anticipated to be 3-5%. The Zacks Consensus Estimate for revenues is pegged at $2.61 billion, implying a decline of 8.95% from the year-ago reported figure.

Further, eBay anticipates non-GAAP earnings per share between 97 cents and $1.01. The consensus mark for earnings has been unchanged at 99 cents per share over the past 30 days. This indicates a growth of 15.1% from the year-ago reported figure.

Factors to Consider:
eBay’s fourth-quarter results are likely to reflect gains from strong momentum across the Marketplace platform.

Further, growing marketing initiatives might have aided the fourth-quarter performance of the Marketplace platform.

The company has been gaining traction among small business owners who are leveraging the Marketplace to expand their reach to customers. This is expected to have remained positive in the fourth quarter.

Also, the increasing number of small businesses is expected to have attracted more customers to the platform. This is likely to have aided growth in the active buyer base in the quarter under review.

The growing adoption of EBAY’s Managed Payments might have continued benefiting the to-be-reported quarter’s performance. Also, deepening focus to scale managed payments worldwide is likely to have been a tailwind.

Further, strength across Promoted Listings is expected to have helped eBay gain momentum across sellers in the fourth quarter. Also, solid promoted listings momentum is likely to have continued driving the company’s advertising revenues.

In addition, eBay has been witnessing growth in sneaker and smartwatch businesses in the United States. This is likely to have contributed well to top-line growth in the quarter under discussion.

During the quarter, the company acquired Sneaker Con’s authentication business named Sneaker Con Digital to strengthen the Authenticity Guarantee service. This might get reflected in the upcoming quarterly results.

In addition to these, eBay is expected to have gained momentum among trading card enthusiasts on the back of Price Guide and Collection tools. This is likely to have benefited the company’s performance in the quarter under review.

Yet, rising competitive pressure from e-commerce giants like Amazon is likely to have continued posing challenges to eBay’s market position.

Further, impacts of the global supply chain disruptions are expected to get reflected in its fourth-quarter results.

The 2022 outlook
Most investors are looking for eBay to sound a conservative note about growth and earnings in 2022. Peers like Shopify have forecast weak sales, especially early in the year, as e-commerce shopping patterns revert to a more normal cadence following the pandemic. eBay might follow its rivals in announcing significant new spending, too, aimed at building infrastructure around all the extra volume that it has accrued over the last three years.

Those factors imply a weak performance for eBay’s stock over the short term. But the company still boasts qualities that make it attractive as an investment, including industry-thumping profitability and cash flow.

eBay Short (Sell)
Enter at: 54.25
T.P_1: 53.13
T.P_2: 50.44
T.P_3: 47.25
T.P_4: 45.38
S.L: 59.21

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