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eBay beats earnings, but shares still fall

June 19th, 2010 by Skip McGrath

Almost two months ago eBay beat Wall Street earnings’s estimates.   The consensus of stock analysts forecast eBay earnings of $0.41 on sales of $2.2 billion.  The company actually reported $0.42 on sales of $2.2 billion This beat the estimates by $0.01 and beating revenues estimates by $8 million.

When this occurs a stock usually goes up.  But since eBay last reported earnings on April 21st (the day before the oil spill in the Gulf of Mexico) their fortunes have been somewhat like BP’s.  eBay stock has dropped from $26.29 to $22.16 –a loss of 15.71% in the past 58 days. That’s not quite as bad as BP, whose stock is down 50% –but why is the market not reacting to an improvement in earnings?

It’s not listing volume. In April eBay was recording 120 million listings. By the end of May they were at 126.7 million and by yesterday they were up to 127.9.  So the volume of listings is growing, but are most of them eBay store listings that generate less fees?  It may also be a factor of sell-through-rates. They haven’t fallen much –down from 33% in April to just above 30% today, but maybe the market is seeing that and getting spooked.

It will be interesting to see what kind of numbers eBay reports in July for the April/June quarter.

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