eBay's Upped Q2 Guidance Is Great, But 1 Big Question Remains

In what comes as a surprise to no one, eBay (NASDAQ: EBAY) has been a big beneficiary of coronavirus-related shutdowns. The online auction and e-commerce platform has proven an important shopping option for stuck-at-home consumers, not to mention a much-needed selling option for brick-and-mortar retailers that haven't been able to open their doors. The company revised its second-quarter guidance upward last week, in a big way.

There is one critique that surfaces when digging deeper into the touted numbers, however. That is, given the backdrop of the COVID-19 contagion and how it brought store-based retailing to a standstill, eBay arguably didn't add enough regular shoppers to its ecosystem. It begs the question: How many of these new (or renewed) customers are going to stick around once the pandemic is in the rearview mirror?

The good news is that eBay's second quarter is going to be even better than expected. The company was originally guiding for organic revenue growth of between 2% and 6% year over year, but management thinks the flood of business spurred by the spread of COVID-19 is going to pump that organic growth up to somewhere between 17% and 19%. This in turn prompted eBay to raise its second-quarter adjusted earnings guidance from a range of $0.73 to $0.80 per share to a range of $1.02 to $1.06 per share. Gross merchandise volume should increase 23% to 26% as well.

Source Fool.com