Shares of eBay Inc (NASDAQ:EBAY) climbed in premarket trade Wednesday after the company exceeded Wall Street's estimates in its third-quarter earnings report.
For the quarter ended September 2018, the commerce platform posted earnings of $0.56 per share on revenue of $2.6 billion. The consensus earnings estimate was $0.54 per share on revenue of $2.7 billion. Revenue grew 10% on a year-over-year basis.
The company said it expects fourth quarter non-GAAP earnings of $0.67 to $0.69 per share on revenue of $2.85 billion to $2.89 billion. The current consensus earnings estimate is $0.67 per share on revenue of $2.91 billion for the quarter ending December 31, 2018.
Shares of the online seller shot up 5.2% to $28.84 before the opening bell.
"This quarter we continued to make foundational investments to improve the long-term competitiveness of our marketplace while setting the stage for significant growth opportunities," said eBay Inc CEO Devin Wenig. "We will continue to innovate the customer experience while executing our growth initiatives in payments and advertising to position eBay for future success."
The company also began accepting Apple Pay, an easy, secure and private way to pay, as one of the first forms of payment in this new experience, with approximately 12% of iOS transactions made with Apple Pay to date.
In the third quarter, eBay completed the sale of its equity investment in Flipkart, representing net proceeds of nearly $1 billion. eBay also recently announced its intent to acquire Motors.co.uk, a leading UK-based classifieds site. Combining the inventory, customer relationships and traffic available on Gumtree UK, eBay Motors UK and Motors.co.uk is expected to help UK car dealers increase their leads and bring buyers more choice.
Analysts at Wedbush said the third quarter results reinforced their view that “eBay will continue to see a challenge in changing core user habits and its brand image to return to ecommerce share gains.”
“The US ecommerce market has grown at a 15% 5-year CAGR and is becoming a bigger part of the overall US commerce market (from 5% in 2012 to 9% in 2017). Despite this strong and steady growth, single-digit penetration highlights the continued big secular opportunity for ecommerce players like eBay that are helping drive the offline to online shopping switch,” wrote Wedbush analysts Ygal Arounian and Amir Chaudhri.
“However, while Amazon’s share of the US ecommerce market has grown from 30% to roughly 45% over that time, eBay has seen its share drop from 12% to 8%,” they added.
The analysts said eBay continued to see a “slower than expected” take-up of its “structured data initiatives, particularly product based listings, for its core users which has stalled the gross merchandise volume acceleration” seen through 2017 and has led to deceleration throughout 2018, now to below 3% in the US marketplace.
Gross merchandise volume, which measures the total value of items sold on eBay, was $22.7 billion for the quarter compared to the $23.2 billion analysts estimated.
The analysts have a Neutral rating on eBay and a $32 price target on the stock.
Contact Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive )
-- (Updates with Wedbush analyst commentary) --