eBay’s Earnings Spark Roller-Coaster Ride

After the beating that most Internet stocks have taken in the last few trading sessions, eBay’s (Nasdaq: EBAY) earnings report, released Monday, had a calming effect for investors, but only for a little while.

The online auction leader beat analysts’ estimates by a penny per share on Monday, reporting net income of $5.1 million (US$) or four cents per share, excluding merger-related charges related to acquisitions such as eBay’s $260 million purchase of auction house Butterfield & Butterfield. Shares of eBay reportedly climbed as high as $110-1/4 in after-hours trading, before falling below 100. The stock had closed down 3-7/16 to 104-3/8 before the earnings report was released.

Shares of eBay are continuing their roller-coaster ride and rebounding in early trading Tuesday. The stock opened at 105 today.

eBay’s overall second-quarter net income was $816,000, or a penny per share. This is significantly less than the $2.73 million, or 2 cents a share, reported in the second quarter of 1998, but eBay had previously reported that a June outage would seriously reduce its second-quarter earnings.

Revenues Still Up Significantly

Still, net revenues for the second quarter were $49.5 million, 154 percent more than the $19.5 million reported for the same period last year. Despite the recent outage problems, eBay reported that it gained 1.7 million registered users in the second quarter and had 5.6 million as of June 30, a 46 percent increase over March 31 and a 556 percent increase over June 30, 1998.

The company hosted 29.4 million auctions during the second quarter, up from 22.9 million in the first quarter of 1999. Gross merchandise sales for the second quarter were $622 million, a 15 percent gain over the first quarter and a whopping 346 percent gain over the second quarter of 1999.

“Our customers now transact well over $200 million in gross merchandise sales per month, making this the most vibrant consumer e-commerce site on the entire Internet,” said Meg Whitman, president and CEO of eBay. “Our community continues to expand at a rate higher than the Internet, in general. During the second quarter, we made unparalleled investments in infrastructure while taking bold moves in several new business areas including international, regional, premium, and person-to-person payments while maintaining profitability in the flagship business.”

Maintaining profitability is a big key for a company that can boast that it’s one of the minority of Internet companies that’s actually making money. After a massive outage that crippled eBay for almost a day in June, there were concerns that eBay might actually lose money in the second quarter. eBay’s stock has been hammered since the outage, partially due to these concerns.