Paypal, Stubhub Provide Headwinds For eBay In Q4

EBay Inc EBAY reported Q4 results broadly in line with muted expectations. While management is making progress in its efforts to reaccelerate growth, headwinds from Paypal Holdings Inc PYPL and Stubhub could keep eBay’s revenue growth flattish, Cantor Fitzgerald’s Youssef Squali said in a report.

Squali maintains a Neutral rating on the company, while raising the price target from $30 to $31.

Q4 Results

EBay reported revenue of $2.40 billion, representing 3 percent year-over-year growth. Pro forma EPS came in at $0.54, marginally ahead of the consensus expectation of $0.53.

MP marketplace gross merchandize value growth accelerated to 5 percent year-over-year, from 4 percent in the prior quarter. Consumer-to-consumer, which represents ~20 percent of GMV, recorded positive growth for the first time in three years. Business-to-consumer GMV recorded flat growth.

Prospects

Management seems to be making progress with its “structured data efforts to reaccelerate growth,” Fitzgerald mentioned, adding, “The tone around the business is improving on the margin in our view.”

EBay’s 2017 guidance came in marginally below consensus estimates, reflects a pickup of 200 basis points in MP GMV growth. The analyst pointed out, however, that headwinds from PayPal and Stubhub were expected to keep eBay’s revenue growth rate “relatively flat” at ~7 percent.

In the e-commerce space, which is growing in the mid- to high-teens range, eBay would likely continue to lose market share over the next two years, even with management’s progress to reaccelerate growth, Fitzgerald stated.