International commerce firm eBay Inc (Nasdaq: EBAY) reported better-than-anticipated fiscal 2021 second-quarter earnings. However, the top line missed analysts’ estimates. Furthermore, the company issued a weak third-quarter revenue outlook based on the slowdown in e-commerce activities. Despite the unimpressive result, the stock gained 1.28% or $0.87 to close at $68.89. The stock has appreciated by roughly 35% since the beginning of the year.
The California-based company reported second-quarter 2021 revenues of $2.668 billion, up 14.1% from $2.337 billion in the comparable period last year.
For the quarter ended June 30th, 2021, eBay posted a net income of $10.734 billion, or $15.92 per share, compared with a net income of $746 million, or $1.06 a share in the quarter ended June 30th, 2020.
The latest results include $294 million, or $0.43 per share from continuing operations, and $10.44 billion, or $15.25 a share from discontinuing operations. Discontinued operations represent eBay’s Korean business.
Notably, on June 24th, 2021, the company announced a deal to sell 80.01% of its stake in eBay Korea business to Emart for roughly $3 billion.
Excluding the gain on investments and sale of business, change in the fair market value of warrant and change in fair value of the equity investment in Adevinta, among others, non-GAAP net income from continuing operations for 2Q21 was $675 million, or $0.99 per share, compared with $702 million, or $0.99 a share in 1Q21.
For Q2 2021, excluding Korean operations, the company had forecast revenues of between $2.58 billion and $2.63 billion. Non-GAAP earnings were projected to be in the range of $0.89-$0.94 per share.
Wall Street analysts anticipated the company to report earnings of $0.9591 per share on revenues of $3 billion.
Notably, gross merchandise volume declined 7% y-o-y to $22.10 billion. Also, annual active buyers fell by 2% to 159 million. On the contrary, annual active sellers increased 5% to 19 million.
The market reacted negatively to this info. GAAP and non-GAAP operating margins were 27.40% and 32.80%, respectively. The company generated operating cash flow and free cash flow of $1 billion and $910 million in the reported quarter.
During the quarter, the company returned $1.60 billion to shareholders, including $1.50 billion in share repurchases and $121 million in cash dividends.
Additionally, on June 24th, eBay completed the sale of Classifieds business to Adevinta for $13.3 billion in cash ($2.50 billion) and stock (540 million shares of Adevinta stock representing 44% stake) deal. Also, the company inked an agreement with Permira to sell roughly 135 million shares of Adevinta for more than $2.40 billion. The deal effectively brought down eBay’s stake in Adevinta to 33%.
The company’s Board increased shares repurchase authorization by another $3 billion. eBay’s Board has also approved a quarterly cash dividend of $0.18 per share, payable on September 17th, 2021.
Looking ahead, the company forecasts third-quarter revenues in the range of $2.42 billion to $2.47 billion. GAAP earnings are projected to be in the range of $0.64 to $0.68 per share. Non-GAAP earnings are anticipated to be between $0.86 per share and $0.90 per share. The Street analysts anticipate the company to post non-GAAP earnings of $0.92 a share on revenues of $2.89 billion.
The mixed Q2 results and weak Q3 outlook is expected to keep the stock bearish in the short term.
The historical price chart indicates that the stock is facing resistance at 70. The next support is anticipated only between 50 and 55. Additionally, the stochastics oscillator is declining towards the bearish zone. We are anticipating the stock to remain in a downtrend in the short term.
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