eBay (EBAY): Key Focus on Sustaining GMV Momentum and AI Utilization in Q3 Earnings

As eBay prepares to release its Q3 earnings, investors are closely watching the company’s growth trajectory, particularly after eBay’s gross merchandise volume (GMV) turned positive last quarter for the first time in a while.

The company’s guidance points to an EPS range of $1.15-1.20 and revenue between $2.50 billion and $2.56 billion, slightly below the consensus for adjusted EPS growth of 15 percent to $1.18 and revenue growth of 2 percent to $2.55 billion. Following a 20 percent rise in eBay’s stock to 52-week highs earlier this year, the focus is now on whether the company can maintain its GMV momentum and capitalize on its AI-driven tools to drive future growth.

Key Metric: GMV Growth and Investor Sentiment

GMV remains one of the most critical metrics for eBay, as it serves as a direct indicator of the platform’s transaction volume and market activity. Last quarter, GMV posted a surprising 1 percent year-over-year increase, breaking a trend of recent declines.

This result propelled eBay’s stock to new highs, signaling renewed investor confidence in the company’s growth potential. For Q3, eBay has projected a GMV range of $17.8-18.2 billion, matching its Q2 outlook. If the company continues to sustain positive GMV growth, it will be on track to meet at least the midpoint of its full-year GMV guidance, which ranges from flat to a 4 percent increase.

Active Buyers: Signs of Stability and Growth

eBay’s user base has been relatively stable, with active buyers hovering around 132 million, remaining unchanged both sequentially and year-over-year in Q2. However, the slight increase in active buyer growth last quarter marked the first positive movement since 2021.

Should eBay manage to extend this modest positive momentum in active buyers through Q3, it would bolster investor sentiment by suggesting that eBay’s user base is not only stable but also showing incremental growth potential. Growth in active buyers is essential for long-term GMV and revenue growth, reinforcing eBay’s potential to remain competitive in the e-commerce space.

AI Initiatives: Streamlining Seller Experience and Enhancing Engagement

A notable area of focus for eBay has been its implementation of artificial intelligence to improve platform efficiency and attract more sellers. One of eBay’s latest AI tools automates item descriptions, using images uploaded by sellers to generate text-based descriptions. This tool helps simplify the listing process, potentially increasing the platform’s attractiveness to sellers.

While management has not yet attributed last quarter’s GMV improvement to this AI-driven feature, it will be crucial for investors to gauge whether this innovation is helping to bolster engagement and, ultimately, GMV growth. Additionally, if eBay can provide more insights into the impact of AI on the platform, it could reinforce its position as a tech-driven e-commerce leader.

Focus Categories: Trusted Niche Markets Drive Performance

eBay has strategically focused on high-margin, niche product categories, which include items like watches, collectibles, auto parts, and refurbished electronics. These focus categories outpaced overall GMV growth with a year-over-year increase of 4 percent in Q2.

Investors will be looking for confirmation that focus categories have continued to perform well in Q3. Given the growing trust in eBay as a platform for such items, any further strength in these categories would demonstrate the effectiveness of eBay’s targeted approach and its differentiation from broader e-commerce competitors.

Market Position and Guidance Expectations

While eBay’s stock has cooled slightly since reaching recent highs, it remains over 40 percent higher year-to-date. With inflationary pressures gradually easing, investors are hopeful that eBay’s Q3 report will reveal sustained momentum in GMV growth along with encouraging Q4 guidance.

If eBay can deliver on these fronts, it could reinvigorate buyer interest and maintain its strong upward trajectory.

Conclusion

As eBay unveils its Q3 earnings, the company stands at a potential inflection point. Sustained GMV growth and successful implementation of AI tools could mark eBay’s return to long-term growth and solidify its appeal as an investment.

With investors keen on seeing stability in active buyers, positive momentum in GMV, and strategic advancements in AI, today’s report will serve as a valuable indicator of eBay’s positioning in the evolving e-commerce landscape. Should eBay meet or exceed its targets, it would likely signal a continued path of recovery and growth, underscoring its value as a specialized marketplace with a tech-forward approach.