Wall Street Watch Thursday: eBay Keeps Bidding Its Earnings Up

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eBayThe market wasn't wowed by eBay's (EBAY) latest quarter, but the online marketplace giant still posted solid results.

Third quarter revenue climbed 15% to $3.4 billion. Adjusted earnings inched 14% higher to $0.55 a share. The showing was generally in line with what Wall Street was expecting, but let's crack open the company's house of verbs.

Yes, this is eBay. It's also the company behind PayPal, and it owns a small stake in Skype after selling most of its position in the online communications platform to Microsoft (MSFT).

PayPal has been the star at eBay in recent years, and Wednesday afternoon's report didn't disappoint on that front. PayPal closed out the September quarter with 117.4 million active registered accounts, 14% ahead of where it was a year earlier. More importantly, a whopping $35.2 billion in transactions passed through PayPal during the last three months, 20% more than what PayPal was facilitating a year ago.

What does it mean when payment volume is growing faster than account growth? Well, that's good. It means that registered users are relying on PayPal to close more of their transactions.
eBay's namesake auction website and marketplace businesses aren't growing as quickly as PayPal, but they are moving in the right direction. Marketplace revenue grew 9% during the quarter.

Encouraged by a solid quarter eBay is now bumping its guidance for all of 2012 higher. eBay is now targeting an adjusted profit of $2.32 a share to $2.35 a share on $13.95 billion to $14 billion in revenue. That's pretty much where the pros are perched right now, but it's good to see that eBay isn't expecting any unpleasant surprises as we head into the holiday shopping season.

Other Things Worth Watching

• American Express (AXP) -- a company that's finding itself butting heads with PayPal more and more as eBay's division begins popping up at more retail establishments -- also reported financial results after Wednesday's market close. It wasn't very impressive. Revenue and earnings climbed a mere 4% and 1% respectively. What's that old Amex tagline? Don't leave home without it? Well, American Express appears to have left without growth. This is slowest growth that the company has experienced in nearly three years. Are card members simply swiping less or have they moved on to competing platforms? We'll know more as more credit card companies report in the coming days.

• Europe is still a bit of a mess, but things may be finally starting to stabilize overseas. The euro actually hit a one-month high against the U.S. dollar in Wednesday's trading, and in a welcome development credit rating agency Moody's simply reiterated its rating on Spain instead of lowering it to junk status. Muy bueno.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Microsoft. The Motley Fool has created a bear call spread position on American Express. Motley Fool newsletter services have recommended buying shares of eBay, creating a synthetic covered call position in Microsoft and creating a write covered strangle position in American Express.


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PhilipCohen

Visa’s online digital wallet, “V.me”, is now out of beta testing on buy.com and, apparently, is generally available for online buyers in the US and Canada (and Australia soon too, I hope).

I expect that those online merchants in North America, that already have a merchant account with an FDIC-insured real bank, will surely now start dumping the clunky PreyPal in favor of Visa’s professional offering. PreyPal will no longer be able to power the bilge pumps that are keeping the leaking old scow eBay from finally slipping beneath the waves. Certainly, once Visa’s V.me is available worldwide, PreyPal will be dead in the water—except possibly for its effectively mandated place on the ever-atrophying eBay Marketplace …

Let’s then see how well the eBafia Don and his clunky Marketplace/PreyPal complex fare in the next twelve months or so …

Regardless, online buyers now have access to a professional online digital wallet: Visa’s “V.me”: https://www.v.me/enrollment/consumers/new

And, the reality of the clunky PayPal, et al ...
http://bit.ly/NFqjmp

eBay / PayPal / Donahoe: Dead Men Walking

October 20 2012 at 1:32 AM Report abuse rate up rate down Reply
sstevenson10

The Housing market will rise..
Here something better than oil and stocks. Until the housing market starts to climb. 2015 real estate boom than comes precious metals
http://www.goldmoney.com?gmrefcode=0801

October 19 2012 at 9:55 PM Report abuse rate up rate down Reply
erink91321

I believe Ebay earnings are Very unrealistic. The buyers just are'nt there like they used to be. Ebay is making both buyers and sellers Very angry by continualy changing their fornat and policies. There are Many " Deadbeat " bidders on Ebay and sellers have little recourse. Sellers used to be able to leave Feedback on Deadbeat bidders to warn other sellers but not now. Buyers had a choice of payment methodes including checks and Moneyorders ( which kept the Postoffice busy ) but not now. They had the best system 10 years ago but since then they have screwed it up. Perhaps they were bought by China ? It seems so. I believe Ebay will pass within 2 years if they continue on this present coarse

October 18 2012 at 10:38 AM Report abuse rate up rate down Reply