Today's decline in eBay's stock value.
eBay's shares took a dive on a Thursday, dipping by 7.61% after the e-commerce giant revealed its financial results for the fourth quarter of 2024. At lunchtime, the stock was down by 7%, having plummeted as much as 11% earlier in the day.
Sluggish growth, tempered expectations
Although eBay slightly surpassed its management's expectations in Q4, the company's revenue of $2.6 billion was only up by 1% compared to the previous year. This minimal growth was primarily due to a 4% increase in gross merchandise volume, which represents the total sales value on its platform. For the entire year, eBay's revenue climbed by 2%, reaching $10.3 billion in 2024.
Investors, however, appeared somewhat dissatisfied with eBay's forecast for the first quarter of 2025. The company expects a 1% revenue growth at best, which is in line with recent trends, but it had led some investors to hope that growth would accelerate due to Meta Platforms' recent decision to include eBay listings on its Facebook Marketplace.
Simply put, eBay's growth pace has remained relatively sluggish. The slow growth that investors have come to expect from eBay has been tempered by their earlier, inflated expectations. With the official guidance confirming the continued slow growth, it's not surprising that investor sentiment has taken a turn for the worse, resulting in the downturn in eBay's stock price.
Silent profitability, generous dividends
Even though revenue growth might be leaving some investors feeling frustrated, the company's management is guiding for significant growth in its earnings per share (EPS). In Q1 2024, eBay reported an EPS of $0.85. But for the upcoming Q1, eBay anticipates EPS to reach around $1, representing almost a 18% increase. This growth is attributable largely to a lower share count.
In addition to delivering promising EPS growth, eBay rewarded its shareholders with substantial profits in Q4, distributing $1 billion between share buybacks and dividends. As a cherry on top, eBay recently announced a 7% boost to its quarterly dividend. This means that while eBay's top line might not be growing at the rate investors had hoped, the company is demonstrating its stability and financial strength through its bottom line and dividend payments.
At the right price, eBay's stock could represent a desirable investment opportunity. If the company's partnerships with industry titans like Meta Platforms and others start to bear fruit, it could potentially foster returns for its shareholders.
- Despite being disappointed with eBay's projected 1% revenue growth for the first quarter of 2025, some investors are still considering it as a potential investment due to the company's expected significant growth in earnings per share (EPS) and generous dividends.
- The sluggish growth in eBay's revenue, which was only up by 1% in Q4 2024 compared to the previous year, led to a downturn in the company's stock price, with shares taking a dive on a Thursday, resulting in a 7.61% decrease.
- To boost investor sentiment, eBay distributed $1 billion between share buybacks and dividends in Q4 2024, and announced a 7% increase in its quarterly dividend. This demonstrates the company's financial strength and stability, even if its revenue growth isn't as rapid as some investors had hoped.
- The e-commerce giant's financial results for Q4 2024, which showed only a 1% increase in revenue compared to the previous year, led to investor disappointment, as many had hoped for accelerated growth due to Meta Platforms' decision to include eBay listings on Facebook Marketplace.
