Investors Buy PayPal, Sell eBay Shares Following Q4 Results

Results out of eBay Inc EBAY and PayPal Holdings Inc PYPL Wednesday afternoon gave more credence to the school of thought suggesting recently spun-off segments often outperform the market.

PayPal Results Looked Solid

PayPal posted fourth-quarter adjusted earnings of $0.36 per share on sales of $2.6 billion. Analysts had been expecting $0.35 in EPS on sales of $2.51 billion. Earnings were up about 27 percent on a year-over-year basis. The company said it is expecting first-quarter earnings in the range of $0.34-$0.36 per share compared to the analyst consensus estimate of $0.35. Fiscal year EPS are anticipated to be in the range of $1.45-$1.50, towards the light end of the $1.49 sell-side estimate. To boot, PayPal announced a new $2 billion buyback plan.

eBay Quarterly Sales And Outlook: Below Estimates

eBay showed a 10 percent decline in quarterly earnings, from $0.55 in the same quarter last year to $0.50 per share. The Street had expected eBay to report earnings of $0.50. Sales at eBay totaled $2.322 billion, down about 1 percent year over year and versus the consensus estimate of $2.32 billion. The company is looking for first-quarter EPS of $0.43-$0.45 on sales of $2.05 billion to $2.1 billion. Analysts are expecting EPS of $0.48 on sales of $2.16 billion. For the full year 2016, eBay sees EPS of $1.82-$1.87, well below the current Street estimate of $1.98. Sales are expected between $8.5 billion and $8.8 billion, compared to the consensus estimate of $8.99 billion.

Opposite Price Action

Shares of PayPal are trading up about 5 percent in Wednesday's after-hours session following better-than-expected fourth-quarter results; eBay shares, meanwhile, are trading down nearly 12 percent on the heels of disappointing quarterly sales.