eBay Earnings: Here is What You Need to Know

eBay Earnings ReportOut of San Jose, Calif., eBay Inc. (NASDAQ: EBAY) reported its quarterly earnings after Wednesday’s market closure, and it posted numbers that beat expectations on the Street, which sent the stock up overnight and into early Thursday morning. The company reported an EPS of 56 cents, which beat estimates by 1 cent, with revenue of $3.4 billion beating by $40 million. Shares rose 1 percent upon the initial release and have spiked since, up more than 8 percent to nearly $44 per share during Thursday morning trading.

The revenue number reported was 23 percent better than its Q2 2011 figure, and its growth rate rose 15 percent over last year’s total. PayPal, which is owned by eBay, saw its revenue rise 26 percent over a year ago and its active accounts rise 13 percent to more than 113 million. PayPal’s net total payment volume was $34.5 billion, up 20 percent from a year ago.

Merchant services revenue for eBay was also significantly up, 23 percent over last year to $23 million. Net income was reported a $730 million, which was 16 percent better than Q2 of 2011.

“We delivered a great second quarter, driven by eBay Marketplaces’ best performance in years, strong growth at PayPal and strong same-store-sales growth for GSI’s large retail customers,” said eBay CEO John Donahoe. “Our entire company is strong, but we’re particularly pleased with eBay Marketplaces, which delivered its strongest organic growth in gross merchandise volume, excluding vehicles, since 2006. And mobile continues to be a game changer. We now expect eBay and PayPal mobile to each transact $10 billion in volume in 2012 — that’s more than double 2011, a staggering surge in mobile shopping and payments on devices that did not exist just a few years ago. Retail is at an inflection point, and we are helping to reshape how people around the world shop and pay.”

The report has been welcomed warmly on the Street, and that translates well for hedge funds like David Blood and Al Gore’s Generation Investment Management and Eric Mindich’s Eton Park Capital. These two funds were invested in eBay stock to the tune of $578 million combined at the end of March, though they represented a semming dichotmoy of opinions on eBay. Of the top five hedge funds in terms of stock holdings, three of them decreased their stakes during the first quarter of 2012 (by at least 15 percent), while two increased their plays (by 3 and 11 percent). Generation Investment was up 11 percent in holdings at the end of March, while Eton Park jettisoned 18 percent of its stake.

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