What to expect from eBay's earnings

What to expect from eBay's earnings

Online auction service eBay reports earnings after the closing bell Wednesday, and there are two big factors investors must monitor, says R.J. Hottovy, managing director of consumer equity research at Morningstar.

First, investors must pay attention to growth across eBay's marketplace division, Hottovy told CNBC. Wall Street will also keep a close eye on the performance of eBay's online payments platform, PayPal, in the runup to its planned spinoff later this year.

Hottovy said a change to Google's algorithms and eBay's data breach earlier this year have pressured gross merchandise volume in its marketplace division.

Revenue growth there fell to 6 percent in the third quarter compared with 12 percent in the prior year period, according to eBay.

"I don't think it's going to rebound in the fourth quarter back to double-digit range. I think that's still going to be under pressure so I think really coming out of that call is what management's game plan is to turn around that business. [That] is going to be critical," Hottovy said.

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PayPal could be a potential takeover candidate, said Hottovy, pointing out the possibility of an acquisition by Google or Alibaba.

"Its versatility, convenience and security factors are above any other mobile payment or online payment platform that's on the market today," Hottovy said.