By Dhirendra Tripathi
Investing.com – eBay (NASDAQ:EBAY) stock plunged 9.92% in premarket trading Thursday, after its fourth quarter results and the annual outlook both proved the worst fears true, indicating that people are logging out from e-commerce websites to go out to shop.
E-commerce was the biggest winner of the pandemic as stuck-at-home consumers preferred online platforms to order clothes, groceries, and electronic items. With the gradual containment of the pandemic and users being tired of online activities, consumers are returning to stores.
Fourth quarter gross merchandise volume (GMV), a key benchmark defining the total value of goods and services sold on an online platform, fell 10% to go below $21 billion. The e-commerce firms’ revenue is derived from a percentage of GMV.
Annual active buyers on the platform also declined 9% to 147 million in the quarter. The company expects more headwinds as costs weigh on margins.
“The second quarter should mark the low point for margins during the year as we lap difficult comps (comparisons) and ramp up our pace of investment," Reuters quoted Finance Chief Stephen Priest as saying.
Revenue in the fourth quarter rose 5% to $2.6 billion, just about matching expectations. Adjusted profit per share was $1.05 and beat estimates.
As the company’s core operations remain under pressure, CEO Jamie Iannone is banking on advertising and payments businesses to make up for it. The company's advertising offerings surpassed $1 billion in revenue for the year. With the complete transition of all sellers to a new payments platform, the company expects the shift to contribute to profits.
The retailer is forecasting annual revenue of $10.4 billion and adjusted profit per share of $4.3 at the midpoint of its guidance range. GMV is seen between $78.3 billion and $80.5 billion.
In the current quarter, eBay expects adjusted profit of $1.01-$1.05 per share on revenue of $2.43 billion-$2.48 billion, both lower from a year ago.