EBay Stock Heads For Worst Day In Over 3 Years After Soft Profit Forecast

• Ebay’s adjusted profit forecast for Q4 and FY25 missed analysts’ targets, although the revenue guide was healthy.
• Shares drop by more than 10% in premarket trading, heading for their worst day since May 2022.
• Ebay says the removal of the U.S.’s “de minimis” exemption is hurting volumes.

Ebay, Inc.’s shares dropped 10.7% in early premarket trading on Thursday, after its profit forecasts for the ongoing quarter and the fiscal year missed Wall Street’s targets.

If the move holds in Thursday’s regular season, it would be the stock’s worst performance since May 2022. It would also cast a brake amid a strong run; as of the last close, the stock has gained 60.7% year to date.

Holiday Period Worries

The company expects EPS of $1.31 to $1.36 in the fourth quarter, a period known for holiday-season shopping and the strongest three months for retailers. Analysts polled by FactSet expect $1.38. Consequently, its full-year forecast of $5.42 to $5.47 also missed the $5.46 target.

The company’s revenue targets for Q4 and fiscal 2025, however, were above analysts’ expectations.

De Minimis Removal Bites

EBay saw a "deceleration in year-over-year volume growth starting in September in key markets importing into the U.S. after the removal of the de minimis exemption," CFO Peggy Alford said on the analyst call.

In late August, the U.S. removed de minimis tariff exemptions for parcel imports, imposing regular duty rates on all shipments valued at $800 or less, affecting online platforms that rely on sales of low-value imported merchandise. 

The company said sellers in Japan and Canada were among the most impacted on eBay’s platform.

Mixed Q3 Results

In the third quarter, the company’s net revenue increased to $2.82 billion, up from $2.58 billion a year earlier, beating analysts’ expectations of $2.73 billion. Adjusted EPS of $1.19 was below the target of $1.33.

On Stocktwits, the retail sentiment for EBAY shifted to ‘bullish’ as of early Thursday, from ‘neutral’ the previous day.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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