Why Is eBay (EBAY) Up 11.8% Since Last Earnings Report?

A month has gone by since the last earnings report for eBay (EBAY). Shares have added about 11.8% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is eBay due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. EBAY Q3 Earnings and Revenues Beat Estimates, Increase Y/YeBay Inc. reported third-quarter 2024 non-GAAP earnings of $1.19 per share, which beat the Zacks Consensus Estimate by 0.85%. The bottom line increased 16% year over year.Net revenues of $2.57 billion surpassed the Zacks Consensus Estimate by 1.09%. The figure increased 3% from the year-ago quarter on a reported basis and on an FX-neutral basis.Strengthening momentum across Focus Categories of EBAY and geo-specific investments was a tailwind.eBay’s first-party advertising products generated revenues of $396 million, up 14% on an FX-neutral basis from the prior-year quarter.Total advertising offerings yielded $408 million in revenues, representing 2.2% of gross merchandise volume (GMV).EBAY has gained 31.4% on a year-to-date basis, outperforming the industry’s increase of 25.1%.The weakening momentum among active buyers was concerning. EBAY’s active buyer base, which stood at 133 million at the end of the second quarter, increased 1% year over year, beating the consensus mark by 0.48%.GMV Details for EBAYEBAY’s total GMV of $18.3 billion in the reported quarter exhibited year-over-year growth of 2% on a reported and 1% on an FX-neutral basis.The reported GMV surpassed the Zacks Consensus Estimate of $18.1 billion.The total GMV is categorized into two parts. U.S. GMV totaled $8.7 billion, accounting for 47.7% of the total GMV. The figure increased 1% year over year. International GMV was $9.56 billion, accounting for 52.2% of the total GMV. The figure grew 2% year over year.EBAY’s Operating DetailsIn the third quarter, eBay’s gross margin was 71.78%, which contracted 2 basis points (bps) year over year.Operating expenses of $1.25 billion fell 6.4%% year over year. As a percentage of net revenues, the figure contracted 492 bps from the year-ago quarter to 48.68%.The non-GAAP operating margin was 27.2% in the second quarter, expanding 80 bps year over year.EBAY’s Balance Sheet & Cash FlowAs of Sept. 30, 2024, cash equivalents and short-term investments were $4.89 billion, down from $5.1 billion as of June 30, 2024.Long-term debt was $6.17 billion at the end of the third quarter, the same as the figure reported at the end of the second quarter.EBAY generated $755 million in cash from operating activities in the third quarter, up from $367 million in the previous quarter.The company’s free cash flow was $646 million in the reported quarter.eBay repurchased $750 million worth of shares and paid out dividends of $131 million in the reported quarter. The company had $1.2 billion remaining under its buyback authorization as of Sept. 30, 2024.GuidanceFor fourth-quarter 2024, eBay expects revenues of $2.53-$2.59 billion. On an FX-neutral basis, revenue growth is anticipated to be (1)-1%. The Zacks Consensus Estimate for revenues is pegged at $2.65 billion.The non-GAAP operating margin for the fourth quarter of 2024 is expected between 26.5% and 27%.GMV for the fourth quarter is likely to be $18.9-$19.3 billion.Non-GAAP earnings per share are anticipated between $1.17 and $1.22. The Zacks Consensus Estimate for the same is pegged at $1.23.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates revision.VGM ScoresAt this time, eBay has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, eBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. 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