On the heels of downbeat quarterly guidance, eBay (EBAY, Financial) saw its stock rise by 3% today, reaching 52-week highs. The boost came from in-line Q3 projections, a solid Q2 performance, and a quicker-than-expected return to positive Gross Merchandise Volume (GMV) growth.
Headline numbers were strong, with Q2 adjusted EPS at $1.18 and revenues at $2.57 billion, a 1.3% year-over-year increase. GMV grew by 1% to $18.4 billion, surpassing eBay's forecast of $17.8-18.2 billion and marking a positive rebound on an FX-neutral basis sooner than expected.
eBay's focus categories, such as watches, collectibles, auto parts, and refurbished items, saw 4% GMV growth, outpacing the rest of the marketplace by 5 percentage points. Auto parts and collectibles were the top contributors, highlighting eBay's strategic focus on these products.
For example, eBay has been expanding its relationship with PSA, a collectibles authentication company, making its platform a go-to choice for buying authenticated collectibles. Additionally, the company has been adding DIY guides on its motors page.
AI is a significant focus for eBay, with investments in technology to attract more sellers and advertisers. AI-driven autofill generates descriptions based on pictures of listed items, and trend-based suggested campaigns are driven by AI. Although these tools have not yet significantly boosted financial results, they hold long-term potential.
Active and enthusiast buyers remained stable year-over-year and sequentially at around 132 million and 16 million, respectively. Management noted that total active buyer growth was fractionally positive year-over-year for the first time since 2021, with gradual improvements in retention. Stability is expected to continue in the near term.
For Q3, eBay projected adjusted EPS of $1.15-1.20 and revenues of $2.50-2.56 billion, both showing similar year-over-year growth as Q2. GMV growth for Q3 is expected to be between $17.8-18.2 billion, flat year-over-year at the midpoint. For the full year, eBay's worst-case scenario for GMV growth is flat, while the best-case scenario is a 4% improvement.
After some initial volatility following eBay's Q2 report, investors are increasingly confident that eBay may be turning a corner. While stagnant active buyer growth may persist over the next few quarters, a stable environment is promising given the challenging demand backdrop.
