Why eBay Inc (NASDAQ: EBAY) stock is crashing

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eBay Inc (NASDAQ: EBAY) stock lost over 8% on 24th October, 2019 (as of  11:35 am GMT-4; Source: Google finance) after the company provided fourth quarter of 2019 forecasts below analysts’ estimates on the back of stiff competition from bigger rivals Amazon.com  and Walmart Inc  in the run-up to the crucial holiday shopping season. The company’s third-quarter net income fell to $310 million compared to $721 million, in the year-ago period. EBAY in the third quarter of FY 19 has reported the adjusted earnings per share of 67 cents, but reported flat adjusted revenue growth to $2.65 billion in the third quarter of FY 19

The company generated operating cash flow of $1 billion and $913 million of free cash flow from continuing operations. The company has also repurchased approximately $1 billion of its common shares and pais $115 million in cash dividends in the third quarter. The company’s $400 million of floating rate notes and $1.15 billion of 2.200% fixed rate notes have matured and were paid during the third quarter 2019.

Moreover, the company’s active buyers rose 4% to 183 million in the third quarter. However, its gross merchandise volume fell 4% to $21.72 billion. The U.S. generated $8.5 billion of GMV, down 6%, while international generated $13.2 billion of GMV, up 1%.

For the fourth quarter, the analysts are projecting the adjusted earnings to be of 76 cents and sales of $2.85 billion. EBay expects adjusted earnings to be in the range of 73 cents to 76 cents a share and sales is expected to be in the range of $2.77 billion to $2.82 billion for the fourth quarter.

For FY 19, the company expects net revenue to range between $10.75 billion and $10.80 billion and non-GAAP earnings per diluted share from continuing operations to be in the range of $2.75 – $2.78

Meanwhile, Former Chief Executive Devin Wenig has resigned from EBAY amid an activist fight in September. Further, Elliott Management and Starboard Financial are pressuring the company to spin off (demerge) StubHub and Classifieds to improve profitability through a wide-ranging review, which is a move that the company disagreed with. However, the company said that it would have an update on the StubHub business before the next earnings release.

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