EBay Beats And Raises--But Is It Enough For Investors?

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EBay's numbers for its first quarter look pretty good with the online auction house beating Wall Street estimates by 3 cents, reporting 42 cents instead of the 39 cents analysts were looking for.

That news came on better-than-expected topline performance as well, with eBay reporting $2.19 billion versus the $2.08 billion analysts anticipated.

For eBay's second quarter, the company expects an EPS range of 39 cents to 41 cents, essentially in line with the 40 cents Wall Street is looking for. The revenue range is $2.1 billion to $2.15 billion, slightly above the $2.11 billion consensus. The news gets a little better full year with eBay now expecting EPS of $1.70 to $1.75, on $8.7 billion to $9 billion in revenue, when analysts had expected $1.68 on $8.79 billion.

Going through some of the key metrics and where there's a little concern about eBay's ongoing business operations: Active User growth was up only 1 percent to 83.9 million users, way below what some analysts on the Street were hoping for, and even lower than the 2 percent the company reported in the previous quarter.

Some analysts I talked to after the number was released expressed concern that the anemic Active User number calls into question how eBay is able to beat revenue and EPS estimates, saying the numbers might be relying too heavily on favorable currency exchange and a weak dollar rather than an improvement in the company's fundamentals. In other words, yes, the earnings numbers are good, but the quality of the numbers may not be as strong as some investors would like.

Another key metric is Gross Merchandise Volume where eBay came in with $16 billion, up 12 percent. An analyst I talked to said the company needs to show growth in this category in order to reassure investors that sellers are still coming to eBay to sell their goods. It's one thing to see a strong revenue number, but again, if the strength is from favorable currencies rather than a healthy increase in GMV, that calls into question just how good these numbers really are. To that point, new listings grew 10 percent to 647 million, but that's still well below the 663 million that Citigroup, for one, was looking for.

Good news for PayPal: the company saw transaction revenue jump to $582 million, way ahead of the $540 million some on the Street were anticipating.

EBay's numbers look good, and the company remains an interesting short-term play. But with currency questions and competition from Amazon still looming, eBay as an investment may not be the slam dunk it appears to be based on today's quarterly beat.

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