Online Retail & Content Bracing For eBay Earnings (EBAY)

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eBay (NASDAQ: EBAY) is set to report earnings after the close today.  First Call has earnings estimates at $0.41 EPS on roughly $2.14 Billion in revenues.  Next quarter estimates are $0.40 EPS on $2.15 Billion in revenues, and the fiscal 2008 target is $1.66 EPS on roughly $9 Billion in revenues.

eBay did already offer some guidance for a comparison with its last earnings.  For this quarter it previously offered guidance of $0.39 to $0.41 EPS on a non-GAAP basis and $2.1 to $2.15 Billion in revenues.  We should get some key insight for 2008 today, and this may be the real determining factor for how Wall Street treats Auction Street.

It is impossible to try pointing out that but there are many articles on the web about how the recent steroid scandal in sports has been affecting the sale of sports memorabilia, which is one key area for eBay.  A general spending slowdown has to also limit aggressive bidding in many areas it serves as well, although that doesn’t translate into an immediate drop in eBay’s cut of the pie until auction prices don’t merit the time spent on an auction process and listings fall off.   

Perhaps more important even that the last quarter is Meg Whitman’s tenure after reports of her impending resignation.  We may now get to find out if those reports were true.  We addressed this yesterday and gave some of the other metrics that have been ongoing there as well. 

Shares were challenging its 52-week lows yesterday and the stock is down well over 30% from its 52-week highs.  Options were pricing in a move of roughly up to $2.00 in either direction today, although we caution that the volatility is high enough right now that actual options analysis is a bit skewed.  Analysts still have an average target close to $40.00, so if the company just does an in-line or is cautious it wouldn’t be a stretch to imagine these targets coming down to say $35.00 or so.

Jon C. Ogg
January 23, 2008