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E-commerce

eBay forecasts bleak quarter as online shopping frenzy wanes

eBay on Wednesday forecast bleak first-quarter results, as the e-commerce platform tackles waning online demand, stiff competition and global supply chain disruptions, sending the company’s shares down nearly 9 per cent in extended trading.

E-commerce companies raked in large profits as online shopping boomed last year during the pandemic, but vaccine rollouts could spell trouble as people return to brick-and-mortar shopping.

Biggest rival and online retail giant Amazon has also forecast disappointing first-quarter sales estimates.

eBay, which is already grappling with declining active users, expects a further hit as ramping up investments put pressure on its margins.

“The second quarter should mark the low point for margins during the year as we lap difficult comps and ramp up our pace of investment,” finance chief Stephen Priest said in a post-earnings conference call.

Shares of eBay, which started as a site where people would auction their collectibles, fell to US$50.28 in extended trading on Wednesday. They declined 18 per cent so far this year, while the broader S&P Index slipped 11 per cent.

eBay expects first-quarter adjusted profit in the range of $1.01 to $1.05 on revenue of $2.43 billion to $2.48 billion; both estimates came in below Wall Street’s expectations.

The company’s 2022 revenue and profit forecasts were also below expectations.

Meanwhile, eBay posted an adjusted profit of $1.05 per share on revenue of $2.61 billion in the fourth quarter ended Dec. 31, above analysts’ average estimates, according to IBES data from Refinitiv.

Part of eBay’s revenue comes from advertising on its platform which crossed $1 billion last year, the company said.

However, gross merchandise volume, the total dollar value of sales on eBay from which the company takes a percentage, fell 10 per cent to $20.7 billion.

Annual active buyers on eBay also declined 9 per cent to 147 million in the quarter, the company said.

  • Reporting by Eva Mathews in Bengaluru; Editing by Shinjini Ganguli, of Reuters.

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