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Mirroring the dynamics from last quarter, despite another upbeat performance in Q4, eBay (EBAY -4%) is selling off today. The e-commerce auction platform registered a decent-sized earnings beat on in-line revenue growth. However, macroeconomic headwinds, including cumulative inflationary pressures and elevated interest rates, continue to cloud near-term demand. Meanwhile, potential tariff impacts add another wrinkle to the story. Combining these with EBAY's ongoing U.K. transformation, rolling out Managed Shipping and no selling fees, which is creating additional headwinds, the result is downbeat Q1 revenue guidance, enough to trigger meaningful selling pressure today, particularly following 52-week highs reached during yesterday's session.

• Q4 results were still sound. EBAY posted its eighth consecutive earnings beat, expanding its bottom line by 17% yr/yr to $1.25. Revenue growth did slow down from the +3.0% posted in Q3, crawling just 0.7% higher yr/yr in the quarter to $2.58 bln. Still, it was enough to edge past consensus. Similarly, GMV reached the high end of EBAY's $18.9-19.3 bln forecast, as growth accelerated by 2 pts sequentially to 4% yr/yr on an as-reported basis. Meanwhile, active buyer growth remained at 1% yr/yr, reaching 134 mln.
• Focus Categories continued to underpin EBAY's solid GMV growth in Q4, boasting a +6% bump yr/yr, nearly 6 pts faster than the company's core categories. Focus Categories include many items that are hard to find on other e-commerce platforms, such as trading cards that carry authentication and a massive number of motor parts and accessories. Both subcategories drove Focus Category growth in Q4, with trading card volumes accelerating to double-digit growth.
• Gen AI also supported EBAY's positive revenue growth in the quarter. EBAY has been increasing GPU capacity to assist sellers in listing items more easily by auto-generating descriptions based on photos. Additionally, advertising growth reached nearly 12% in Q4, propped up by an acceleration in first-party advertising as sellers lean on Promoted Listings to drive sales.
• However, 2025 is shaping up to be a bumpier year for EBAY. The company is currently overhauling its offering in the U.K., weighing on its take rate on a yr/yr basis in Q1. Furthermore, economic challenges are not abating in the U.K. and Germany, which remain a drag on EBAY's International GMV growth. Also, tariffs are adding a layer of stress. Management mentioned that it has modeled for a range of tariff outcomes in its guidance, potentially prompting a more conservative outlook.
• EBAY expects Q1 adjusted EPS of $1.32-1.36, revs of $2.52-2.56 bln, and GMV of $18.3-18.6 bln, representing FX-neutral yr/yr growth of flat to +1%, a significant drop from Q4. For the year, EBAY does not expect conditions to improve drastically, targeting low-single-digit GMV growth on an FX-neutral basis.

Bottom line, Q4 results were solid, but guidance clouded encouraging points from the quarter. EBAY is gearing up for potentially harmful tariff effects while already facing economic hurdles in the U.K. and Germany and overhauling its platform in the U.K. While EBAY may be guiding too conservatively, investors are not taking chances, taking profits off the table as they wait for the dust to clear.