Investors had a pleasant surprise on Wednesday, Oct.22, when eBay Inc. announced that its Q3 profits are bigger than anticipated.
The company faced pessimistic forecasts after it parted ways with PayPal. PayPal Holdings Inc, one of the leading companies in the area of payment processing, took a separate road from eBay on July 18.
The progress of the e-commerce company comes after eBay left S&P 500, to be replaced by former business partner PayPal Holdings Inc. After the two companies diverged, CEO Devin Wenig came up with a robust plan to raise investor's interest towards eBay.
The unexpectedly good quarterly results of eBay led to an increase in share value of about 9 percent. The company boosted its non-GAAP forecast for Q4 by 2 cents per share, and estimated an income between $2.275 billion to $2.325 billion. Good market signals, favorable tax rate and plans to purchase more of its own stocks will help the company obtain these results in Q4.
Google's search motor fares poorly when users search for eBay items, but voices from the company claim that a broader web search can provide better listings of eBay's products. Wenig made clear that a structured database will lead to better SEO behavior, but this is a time consuming process. Also, he affirmed that more specific product categories will aid the search on eBay.
"[Q3 results] are a step in the right direction," Devin Wenig thinks. He points out that in order to get to a two-digit increase, like the one from two years ago, EBay must keep strive to improve.
Wenig added that the selling process was tweaked so that special attention was given to small and medium-sized vendors. The strategy provided positive results: during the third quarter, two million new active customers joined EBay's market, raising the total number to 159 million buyers.
The Q3's track record shows that the company can grow independetly. However, eBay's profits are engendered by customers who decide to sell on rival sites, such as Amazon. Total profits for the third quarter registered a 25 percent drop to $539 million and revenues went down 2% to $2.1 billion.
"We still have a lot of work ahead of us in order to reposition our business and to deliver the level of performance that we aspire to achieve," Wenig said during a conference call.
One extra breath of fresh air is expected to come from the winter holidays, a very lucrative period for vendors online and offline.
