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On the heels of downbeat quarterly guidance, eBay's (EBAY +3%) in-line Q3 projections were refreshing. Combining this with another quarter of decent top and bottom-line upside in Q2 and a quicker-than-expected return to positive Gross Merchandise Volume (GMV) growth was enough to push the stock to 52-week highs today.

• Headline numbers are important, making EBAY's Q2 adjusted EPS of $1.18 and revs of $2.57 bln, a 1.3% bump yr/yr positive developments. However, what took the cake was GMV growth of +1% to $18.4 bln, above EBAY's $17.8-18.2 bln forecast and finally representing a rebound to positive territory on an FX-neutral basis, quicker than management's Q3 or Q4 prediction.
• Reflecting EBAY's competitive advantage in the e-commerce space, focus categories, i.e., watches, collectables, auto parts, refurbished items, etc., touted 4% GMV growth, outpacing the rest of the marketplace by around 5 pts. Auto parts and collectables were the top two contributors, an encouraging sign given EBAY's attention on these products.
  • For instance, EBAY has been expanding its relationship with PSA, a collectables authentication company, making its platform a go-to choice for buying authenticated collectables. Meanwhile, the company has been adding DIY guides on its motors page.
• AI commands much of EBAY's focus, investing in the technology to drive more sellers and advertisers to its platform. Its AI-driven autofill generates a description based on pictures of whatever the seller is listing. Meanwhile, EBAY is doing trend-based suggested campaigns driven by AI. These tools seem relatively modest; thus far, they have not significantly boosted overall financial results. However, AI is still in its early stages and could become a difference-maker over the long haul.
• Of course, EBAY is nothing without buyers. On that front, active and enthusiast buyers remained stable yr/yr and sequentially at around 132 mln and 16 mln, respectively. Encouragingly, management mentioned that total active buyer growth was fractionally positive yr/yr for the first time since 2021. At the same time, retention continued to improve gradually. Stability is expected to remain the general theme over the near term.
• EBAY projected Q3 adjusted EPS of $1.15-1.20 and revs of $2.50-2.56 bln, both translating to similar yr/yr growth at their respective midpoints as in Q2. Likewise, Q3 GMV growth is projected to hover between $17.8-18.2 bln, flat yr/yr at the midpoint. For the year, EBAY's worst-case scenario for GMV growth is flat, while its best-case scenario called for a +4% improvement.

After some up-and-down movement immediately following EBAY's Q2 report, investors have grown more convinced that EBAY may finally be turning a corner. Stagnant active buyer growth may be the norm over the next few quarters, but a continuously stable environment is promising given the challenging demand backdrop.