Why EBay Stock Plummeted This Week

Core Insights - EBay's stock experienced a significant decline of 16.4% despite reporting better-than-expected quarterly results, indicating investor concerns over margin weakness and forward guidance [1][3]. Financial Performance - EBay reported non-GAAP adjusted earnings per share (EPS) of $1.36 on revenue of $2.82 billion for Q3, surpassing Wall Street's estimates of $1.33 EPS and $2.73 billion in revenue [3]. - Year-over-year sales increased by approximately 9%, while adjusted EPS rose by 14% compared to the same quarter last year [3]. - The company's operating margin fell from 23.1% in the previous year to 20.4% in the current quarter, with adjusted operating margin slightly declining from 27.2% to 27.1% [3]. Forward Guidance - EBay provided a sales guidance for Q4 between $2.83 billion and $2.89 billion, exceeding the average Wall Street target of $2.79 billion [4]. - However, the guidance for adjusted EPS in Q4 is projected to be between $1.31 and $1.36, which is below the average analyst estimate of $1.39 [5]. - The anticipated margin weakness has led investors to assign lower valuation multiples to EBay's stock [5].