EBay shares slide ahead of analyst day
NEW YORK (AP) — Shares of eBay Inc. declined on Monday, as investors fretted over the long-term guidance that the e-commerce company is expected to offer later this week at its annual analyst day — as well as a Senate vote Saturday that gives states more power to collect online sales taxes, which the company opposes.
While eBay is usually "prudently cautious," investors may be nervous about what the company will set for expectations for the next two to three years, said Baird analyst Colin Sebastian, who has an "Outperform" rating on the stock.
Another possible concern, he added, could be the Senate's approval of a budget early Saturday that gives states more power to collect online sales taxes on purchases made from Internet companies in other states. That could hurt eBay, because its many small-time sellers might have a difficult time implementing tax collection into their sales practices.
Stifel Nicolaus analyst Jordan Rohan expects eBay to give 2015 guidance for earnings of $3.50 to $3.85 per share on revenue of $20 billion to $22 billion. On average, analysts polled by FactSet are expecting earnings of $3.74 per share on revenue of $21.4 billion.
Rohan also had a series of questions for eBay regarding its PayPal unit ahead of Thursday's analyst day. Concern over new fees that MasterCard and possibly other credit card companies plan to start charging has been hurting eBay stock in recent weeks, and Rohan said in a note to clients that he'd like details on how these fees will impact the profit margin on PayPal transactions.
The analyst also questioned why PayPal has only 5 percent of the mobile payments business, and said he would like to get an update on consumer use of PayPal at checkouts, and what incentives the company will offer to lure customers to use the service at retail stores. He also wants an update on the deal announced in August with Discover to enable merchants to accept PayPal easily. EBay said it is on track with the Discover plan to go live in the second quarter.
Rohan said the key to eBay's analyst day is whether the company gives guidance specific enough to beat investors' expectations. He said that eBay management is too smart to provide high-margin targets and instead will probably provide an outlook that is "just enough to keep shares steady while showing solid growth and market share gains in both marketplaces and payments."
He suggested that after the analyst day, investors will be comfortable with eBay's current stock price and be open to giving the San Jose, Calif., company some wiggle room so it can make investments for the future. Rohan kept a "Buy" rating and $63 price target on eBay shares.
Shares of eBay Inc. fell $1.96, or 3.7 percent, to close at $51.31 on Monday. The stock has struggled since its recent peak on Feb. 1 at $57.26.