eBay Inc. sounded a warning bell for its investors and said that the company would miss its first-quarter sales estimates despite shoppers returning to spending habits that were seen before the pandemic.
The shares fell around 12% in extended trading on Wednesday.
What’s the story?
The company’s sales are estimated between $2.43 billion to $2.48 billion for the period ending March. As per data compiled by Bloomberg, average analysts estimate sales are $2.6 billion and earnings per share of $1.07. According to the San Joes, California-based company, the earnings per share will be between $1.01 and $1.05, falling short of expectations.
The momentum gained by eBay during the coronavirus pandemic when consumers stopped visiting physical stores and shopped on websites is now fading. People are returning to in-person buying and browsing. As per Bloomberg News, Chief Executive Officer of eBay, Jamie Iannone, maintained that its payment and advertising business will have elevated profits even if the total consumer spending on its website falls.
The company shares fell to $47.72, an intraday low in New York after extended trading ended, closing at $54.59. The stock has declined by more than 11 % in the last year.
The company ended with 147 million buyers for the first quarter, down by 9% for the same period a year back. The volume of gross merchandise, which is the total value of all goods sold, fell by 10% for the quarter ended 31 December 2021 to $20.73 billion.
eBay has been slowly divesting small units of its company to appease activist investors unhappy with the company’s slow growth. In November 2021. eBay announced that it completed its sale of more than 8% of its online marketplace in South Korea to E-Mart Inc., a local Retailer, for $3 billion.
