Key moments
- eBay’s stock dropped 8% in premarket trading due to the company’s projected revenue for the first quarter of 2025 falling short of market expectations.
- Company’s revenue forecast for the first quarter of 2025, estimated to be between $2.52 billion and $2.56 billion, reflects a projected year-over-year growth between -1% and 1%, which is lower than expected
- eBay’s CFO, Steve Priest, highlighted the challenging macroeconomic conditions, which could impact the company’s business and other cut-price retailers that rely on duty-free exemptions for items under $800.
eBay’s stock experienced a significant drop of 8% in premarket trading on Thursday, triggered by the e-commerce platform’s projected revenue for the first quarter falling short of market expectations. This overshadowed the company’s otherwise positive fourth-quarter earnings, which surpassed analyst predictions. The adjusted earnings per share for the fourth quarter reached $1.25, exceeding the anticipated $1.21. Furthermore, the reported revenue for the quarter was $2.6 billion, slightly higher than the estimated $2.58 billion, representing a year-over-year increase of 1%.
Despite the positive results, investors reacted negatively to eBay’s revenue forecast for the first quarter of 2025, which estimated between $2.52 billion and $2.56 billion, failing to meet the consensus of $2.6 billion. This lower-than-expected guidance reflects a projected year-over-year growth between -1% and 1%. The company indicated that ongoing inflationary pressures and elevated interest rates have continued to dampen consumer spending, particularly affecting demand for discretionary, non-essential purchases.
During the post-earnings conference call, CFO Steve Priest highlighted the “challenging” macroeconomic conditions, specifically mentioning uncertainties surrounding potential changes in U.S. tariffs and de minimis regulations. Recent moves by the U.S. government to re-evaluate the rule that allows items under $800 to enter the country duty-free could impact cut-price retailers like Temu and Shein that rely on this exemption.
eBay’s gross merchandise volume for the fourth quarter totaled $19.3 billion, reflecting a 4% increase. Advertising revenue contributed $445 million to the total revenue, accounting for 2.3% of GMV. Looking ahead to the first quarter, eBay anticipates adjusted earnings per share to be between $1.32 and $1.36, aligning with analyst expectations of $1.33.
In terms of capital allocation, eBay repurchased $900 million of its common stock during the fourth quarter and distributed $128 million in cash dividends. The board of directors has also declared a cash dividend of $0.29 per share, scheduled to be paid on March 28.
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