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EBay (EBAY 2.89%) stock got hit hard in this week's trading despite a better-than-expected quarterly report from the company. The e-commerce specialist's share price sank 16.4% in the week. EBay published its third-quarter results on Oct. 29 and reported sales and earnings for the period that outperformed Wall Street's forecasts. Unfortunately, the company showed some margin weakness in the quarter -- and its forward guidance wound up leading to big sell-offs. Q3 beats couldn't prevent sell-offs for EBay stock EBay notched non-GAAP (adjusted) earnings per share (EPS) of $1.36 on revenue of $2.82 billion in Q3, beating the average Wall Street analyst estimate's call for per-share earnings of $1.33 on revenue of $2.73 billion. Sales were up roughly 9% year over year in the period, and adjusted EPS rose 14% compared to last year's quarter. The company's operating margin declined from 23.1% in last year's quarter to 20.4% in this year's period, and its adjusted operating margin declined from 27.2% to 27.1%. What's next for EBay? EBay actually issued better-than-expected sales guidance for Q4, with its target for sales between $2.83 billion and $2.89 billion coming in well ahead of the average Wall Street target for sales of $2.79 billion in the period. Unfortunately, the revenue guidance came with a pretty significant catch. For Q4, EBay is guiding for adjusted EPS to be between $1.31 and $1.36. Meanwhile, the average analyst estimate had called for adjusted per-share earnings of $1.39. So, while the business expects to post strong sales this quarter, weakness for margins is causing investors to assign lower valuation multiples to the stock.
