eBay (EBAY) stock plunged 8.5% in after-hours trading yesterday after the company gave weak revenue guidance for the first quarter of Fiscal 2025. The stock decline is surprising, considering that eBay reported better-than-expected earnings for the fourth quarter of Fiscal 2024. eBay’s online marketplace continues to face stiff competition from larger rivals Amazon.com (AMZN) and Alibaba (BABA).
eBay’s CFO Steve Priest mentioned in the earnings call that the company has been witnessing sluggish consumer demand for discretionary items as inflation and high interest rates dampen consumers’ buying habits. eBay’s performance in Europe was particularly impacted by these macro factors. Going forward, the company faces uncertainty even in the U.S. owing to the “U.S. tariffs and de minimis changes,” Priest added.
eBay Beats Q4 Earnings
In Q4, eBay’s adjusted earnings per share (EPS) of $1.25 easily beat the consensus of $1.20. Meanwhile, revenue of $2.58 billion came in line with analysts’ expectations. In the prior-year quarter, eBay had reported adjusted EPS of $1.07 on revenue of $2.56 billion.
The e-commerce retailer attributed the solid quarterly performance to consecutive growth in GMV (Gross Merchandise Value). GMV refers to the total value of goods and services sold on the platform and is an important metric to gauge an e-commerce retailer’s performance. GMV for Q4 rose 4% year-over-year to $19.3 billion. Notably, eBay generated $445 million from advertising revenue during the quarter, which represents 2.3% of the GMV.
eBay Gives Disappointing Q1 Outlook
For Q1FY25, eBay guided for revenue between $2.52 billion and $2.56 billion, while the consensus is pegged at $2.59 billion. At the same time, eBay forecasted adjusted EPS in the range of $1.32 to $1.36, in line with the analysts’ expectations of $1.33.
Furthermore, eBay expects Q1 GMV to be in the range of $18.3 billion to $18.6 billion, also below the consensus estimate of $18.8 billion.
The company’s board of directors also declared a quarterly cash dividend of $0.29 per share, to be payable on March 28. During Q4, eBay repurchased $900 million worth of common stock and paid $128 million in cash dividends.
Is eBay a Buy or Sell Stock?
Analysts prefer to remain on the sidelines on eBay’s stock currently owing to the unfavorable macro environment. On TipRanks, EBAY stock has a Hold consensus rating based on four Buys, six Holds, and two Sell ratings. Also, the average eBay price target of $65.17 implies 5.7% downside potential from current levels. In the past year, EBAY stock has gained 58.8%.
It is important to note that the price target forecast, and ratings could change after analysts revisit their views on EBAY stock, post earnings.
