eBay Faces Stock Decline After Mixed Q4 2024 Results

Shares of e-commerce platform eBay (NASDAQ: EBAY) fell significantly on Thursday following the release of its financial results for the fourth quarter of 2024. As of noon ET, eBay’s stock was down by 7%, having previously dropped as much as 11% earlier in the day.

Mild Revenue Growth Fails to Impress Investors

In Q4 2024, eBay slightly exceeded the guidance provided by management. The company’s revenue reached $2.6 billion, reflecting a 1% increase year-over-year. This modest growth was driven by a 4% rise in gross merchandise volume (the dollar value of sales on its platform). For the entire year, eBay reported revenue of $10.3 billion, up 2% compared to 2023.

Despite these results, investor sentiment turned negative, primarily due to eBay’s outlook for the first quarter of 2025. Management anticipates Q1 revenue growth to stagnate at 1% at most. While this growth rate aligns with recent quarters, investors had hoped for a more robust performance, especially after Meta Platforms began allowing eBay listings on its Facebook Marketplace.

Essentially, eBay’s growth trajectory remains static. The initial excitement around Meta’s announcement raised investors’ expectations. However, the subdued guidance has led to disappointment, contributing to the stock’s decline.

Shareholder Rewards Amid Slow Growth

While eBay’s revenue forecasts may appear modest, the company is optimistic about its earnings per share (EPS). EPS for Q1 2024 was reported at $0.85, with expectations now around $1 for the upcoming quarter, indicating nearly 18% growth due to a reduced share count.

eBay is demonstrating its profitability by rewarding shareholders with $1 billion in Q4 alone, which includes share repurchases and dividends. Notably, the company recently announced a 7% increase in its quarterly dividend. Thus, although top-line growth remains lackluster, eBay proves capable of generating bottom-line growth and enhancing dividend distributions.

If eBay is valued correctly, its stock may present an attractive investment opportunity. Potential partnerships with Meta and other entities could eventually lead to stronger growth and improved returns for investors.

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Randi Zuckerberg, former director of market development and spokesperson for Facebook, is a member of The Motley Fool’s board of directors. Jon Quast does not hold shares in any mentioned stocks. The Motley Fool holds shares in and recommends both Meta Platforms and eBay. For full disclosure, please review the Motley Fool’s policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.