Despite a strong Q4 performance, eBay (EBAY, Financial) is experiencing a sell-off, dropping 4%. The company reported a significant earnings beat with steady revenue growth. However, macroeconomic challenges like inflation and high interest rates are affecting short-term demand. Additionally, potential tariff impacts and ongoing changes in the U.K., such as Managed Shipping and no selling fees, contribute to a cautious Q1 revenue outlook, triggering selling pressure after reaching 52-week highs.

• eBay achieved its eighth consecutive earnings beat, with a 17% year-over-year increase in earnings to $1.25. Revenue rose 0.7% year-over-year to $2.58 billion, surpassing expectations. GMV hit the high end of the $18.9-19.3 billion forecast, with a 4% year-over-year increase. Active buyers grew by 1% year-over-year, totaling 134 million.
• Focus Categories drove GMV growth, with a 6% year-over-year increase, outpacing core categories. Items like trading cards and motor parts, which are difficult to find elsewhere, contributed significantly to this growth.
• Gen AI supported revenue growth by improving listing efficiency through auto-generated descriptions. Advertising revenue increased nearly 12% in Q4, driven by first-party advertising and Promoted Listings.
• eBay is facing challenges in 2025, with a U.K. platform overhaul affecting the take rate and economic issues in the U.K. and Germany impacting International GMV growth. Tariffs add further stress, leading to a cautious outlook.
• For Q1, eBay expects adjusted EPS of $1.32-1.36, revenues of $2.52-2.56 billion, and GMV of $18.3-18.6 billion, reflecting flat to 1% FX-neutral year-over-year growth. The company anticipates low-single-digit GMV growth for the year on an FX-neutral basis.

Overall, while Q4 results were strong, eBay faces challenges from potential tariffs, economic issues in key markets, and platform changes in the U.K. Investors are cautious, opting to take profits as they await clearer conditions.