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Online auctioneer eBay (Nasdaq: EBAY) released third-quarter earnings after the bell today (Wednesday).
Here's what you need to know – and how to play eBay stock now:
- EBAY stock: Shares dropped nearly 4% after hours, and they slumped all day ahead of release. As of 3:30 pm EDT, EBAY stock was down 1.56% to $49.80 a share. But then again, Wednesday was an all-around rough day for markets. The S&P 500 turned negative for the year, the Dow fell by as much as 460 points, and the 10-year Treasury yield hit a 16-month low.
- Earnings beat, revenue miss: The company topped analysts' estimated earnings per share (EPS) of $0.67 by $0.01, up from $0.64 the same quarter last year. But eBay fell short in sales. Revenue came in at $4.35 billion, $1 billion under projections. Revenue was $3.89 billion the same quarter last year.
- Disappointing guidance: EBay said it expects Q4 earnings to come in between $0.88 to $0.91 a share, and revenue of between $4.85 billion to $4.95 billion. That's below estimates for $0.91 a share on sales of $5.16 billion.
- The PayPal factor: On Sept. 30, eBay said it will spin off its PayPal unit into a separate, publicly traded company in the latter half of 2015 – an idea originally proposed by activist investor Carl Icahn, who has a 2.5% stake in eBay. That puts pressure on eBay's Marketplace unit. You see, PayPal made $2 billion in revenue this quarter, nearly that of Marketplace's $2.2 billion. And PayPal's growth dwarfed eBay's. Net Payment Volume (NPV) for PayPal was up 29%, compared to Marketplace's gross merchandise volume growth of 9%. Here's what eBay had to say about the upcoming spin-off in earnings today:
"Rapidly changing competitive environments in commerce and payments underscore the opportunities for eBay and PayPal, and highlight how each business will benefit from the focus and agility of being an independent company," eBay president and Chief Executive Officer John Donahoe said in a statement. "As we prepare to separate eBay and PayPal in 2015, our teams are focused on strong execution to ensure each business is set up for long-term success."