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eBay tumbles as customers go offline, online shopping declines

By Dhirendra Tripathi – eBay (NASDAQ:EBAY) stock plunged 9.92% in premarket trading on Thursday after its fourth-quarter earnings and full-year outlook both proved the worst fears were true, indicating that people are disconnecting from e-commerce sites to go to store.

E-commerce has been the big winner from the pandemic as homebound consumers have preferred online platforms to order clothes, groceries and electronics. With the gradual containment of the pandemic and users 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 below $21 billion. E-commerce business revenue comes from a percentage of the GMV.

Annual active buyers on the platform also fell 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 in margins for the year as we weather tough comparisons and accelerate our pace of investment,” chief financial officer Stephen Priest was quoted as saying by Reuters.

Fourth-quarter revenue rose 5% to $2.6 billion, roughly in line with expectations. Adjusted earnings per share were $1.05 and beat estimates.

As the company’s core businesses remain under pressure, CEO Jamie Iannone is banking on the advertising and payment businesses to compensate. The company’s advertising offerings topped $1 billion in revenue for the year. With all sellers fully transitioning to a new payment platform, the company expects this change to help with earnings.

The retailer forecasts annual revenue of $10.4 billion and adjusted earnings per share of $4.3 in the middle of its guidance range. GMV is seen between $78.3 billion and $80.5 billion.

In the current quarter, eBay expects adjusted earnings of $1.01 to $1.05 per share on revenue of $2.43 billion to $2.48 billion, both lower than a year ago. one year old.

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