Photo Credit: Mike Knell / Flickr.com

With the holiday season around the corner, market expectations from retail and e-commerce players normally run high. But eBay’s (Nasdaq: EBAY) recent result announcement delivered a lackluster outlook. Even though it surpassed expectations for the previous quarter, its outlook has disappointed the market, causing the stock to tumble.

eBay’s Financials

eBay’s Q3 revenues grew 6% over the year to $2.2 billion, ahead of the Street’s expectations of $2.186 billion. EPS of $0.45 was also ahead of the market’s forecast of $0.44 for the quarter.

During the quarter, gross merchandise volume (GMV) grew 3% over the year to $20.1 billion. It added over 1 million active buyers across its platforms, to end the quarter with 165 million global active buyers. Analysts had forecast a user base of 167 million for the quarter.

The Marketplace platforms delivered 2% growth in revenues to $1.8 billion and $19 billion of GMV. StubHub also delivered a strong quarter with GMV growing 23% to $1.1 billion and revenues increasing 32% to $263 million. The Classifieds platforms grew 11% to $197 million, primarily driven by the Automotive and Real Estate verticals.

For the current quarter, eBay forecast revenues of $2.36 billion-$2.41 billion with an EPS of $0.52-$0.54. The forecast was at the lower end of the Street’s outlook of $2.399 billion for the quarter with an EPS of $0.54. Wits its outlook, eBay will end the year with revenues between $8.95 billion and $9 billion and EPS of $1.85-$1.90. The Street had forecast full year revenues of $8.95 billion and an EPS of $1.89.

eBay’s User Experience Improvements

eBay continued to make several advancements in improving search and related user experience. During the quarter, eBay added a new feature called Quick Sale to its mobile offering. Quick Sales is a targeted consumer destination for selling mobile phones.

It is also improving its StubHub offering by adding its virtual reality technology to more venues in the United States. In March this year, StubHub had launched a virtual reality service that allowed users at select venues to get an immersive 3D tour of the available seats to help decide which seats worked best for them. It also launched a blended primary and secondary ticket sale experience in partnership with the Philadelphia 76ers. The new platform is an industry-first offering that will combine the primary and secondary ticket buying experience on a single platform.

eBay is also growing inorganically. It recently announced the acquisition of Corrigon Ltd., a pioneer of visual search technologies. eBay expects to leverage Corrigon’s technology within the Marketplace platform’s structured data initiative to deliver an improved visual search experience to its users. Terms of the deal were not disclosed.

Additionally, eBay is cataloging its listings that will require sellers to provide more information on the products they wish to sell. The cataloging will help eBay better organize products, thus making them appear in Google’s search results. Other enhancements include personalized recommendations for buyers and notifications to the seller to tell them about their quick selling products.

eBay and Facebook

Despite its efforts, eBay has a tough road ahead. While traditional competitors like Amazon continue to dominate the market, there are newer players also joining the e-commerce bandwagon. According to market reports, Facebook is now expanding its presence in the sector with features with the launch of a service called Marketplace. Facebook’s Marketplace will allow users to buy food, get movie tickets, get quotes from local businesses, and request a service appointment. Analysts expect that the service will pose a threat to eBay and Craigslist.

For now, though, Facebook (FB) has entered into a partnership with eBay to leverage its technology to launch a shopping service on the Messenger app. ShopBot is a personal shopping assistant that will help consumers get information on the best deals on eBay. The service is available in beta now and can be accessed within the Facebook Messenger app. The user can then interact with the bot and provide details on things that they are looking to buy while the bot will provide options on eBay and help them narrow the search down. Users will also be able to submit a photo of the product they are looking for and the bot will find similar items on eBay for sale. The partnership will help eBay reach out to the billion plus members for Facebook Messenger.

Its stock is currently trading at $29.22 with a market capitalization of $33 billion. It touched a 52-week high of $33.19 earlier last month. Its 52-week low was $21.52 in February this year.

(Click on image to enlarge)

​