EBay stock sinks after lackluster Q4 guidance, election distraction

• Shares of EBay slid in extended trading after the company issued lackluster guidance for the fourth quarter.
• The disappointing forecast overshadowed eBay's better-than-expected results for the third quarter.

Shares of eBay slumped about 9% in extended trading on Wednesday after the online marketplace issued guidance for the fourth quarter that fell short of Wall Street's expectations.

Here's how the company did in the third quarter:

• Earnings: $1.19 per share vs. $1.18 per share expected by LSEG
• Revenue: $2.58 billion vs. $2.55 billion expected by LSEG

For the current quarter, eBay predicted revenue to between $2.53 billion and $2.59 billion, which would represent a 1% decline to a 1% increase year over year. The guidance trailed the average analyst estimate for fourth-quarter revenue of $2.65 billion, according to StreetAccount.

The company also said it expects $1.17 to $1.22 in adjusted earnings per share in the fourth quarter. The top end of the range is in line with consensus estimates of $1.22 per share.

EBay has faced increased competition in e-commerce from rivals like Amazon, Walmart and Etsy, as well as low-cost upstarts Temu and Shein, which both have ties to China. To keep buyers and sellers returning to its site, the company has leaned into so-called "focus categories," such as collectible sneakers, used luxury goods and auto parts. It'd also announced artificial intelligence tools that provide personalized recommendations for shoppers and streamline the creation of seller listings.

EBay CEO Jamie Iannone said in an interview following the earnings report that the weak guidance was due to a number of "one-time factors." He cited the prevalence of hurricanes at the beginning of the quarter and shoppers being distracted in the run-up to the U.S. presidential election in November. He also pointed to the shorter holiday shopping season, which has five fewer days between Thanksgiving and Christmas this year compared with last year.

A recent survey by Deloitte found volatile weather and election distraction are expected to be top of mind among holiday shoppers this year. Amazon also cited similar factors behind its weaker-than-expected guidance in its latest earnings report. Amazon reports third-quarter results on Thursday.

Iannone said eBay has seen traction among shoppers despite the rocky macroeconomic environment, noting consumers can "buy used and refurbished and find great values, which tends to be even more beneficial in challenging times."

"When you look at the trajectory and the momentum that we're on, we're exactly where we expected to be," Iannone said. "We feel really good."

Steve Priest, eBay's finance chief, said the company has seen "solid execution" on its strategic initiatives, which drove continued gross merchandise volume "growth amid a dynamic macro environment."

GMV, or the dollar value of items sold on eBay's marketplace, grew 2% year over year to $18.3 billion, eBay said. That topped analysts' projected $18.1 billion, per StreetAccount estimates.

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