eBay (EBAY): Here are a few strategic initiatives anticipated to fuel growth

Shares of eBay Inc. (NASDAQ: EBAY) fell over 4% on Monday. The stock has gained 8% year-to-date. The company delivered revenue and profit growth for the fourth quarter of 2024 against a challenging economic backdrop. In addition, its geo-specific investments and various growth initiatives continue to yield benefits.

Growth in sales and profits

In the fourth quarter of 2024, eBay generated revenue of $2.6 billion, up 1% year-over-year on a reported and foreign exchange (FX) neutral basis, while its adjusted earnings grew 16% to $1.25 per share.

Gross merchandise volume (GMV) grew by 4% in the quarter to $19.3 billion, with a 6% growth in focus category GMV and strong gains across trading cards, parts and accessories (P&A), luxury and refurbished. GMV grew in both the US and International segments, helped by holiday season demand.

Strategic initiatives

Motors, Parts and Accessories (P&A) is eBay’s largest focus category and a significant contributor to GMV growth. As mentioned on the quarterly call, in Q4, P&A inventory grew by double-digits, and the company currently has over 700 million live P&A listings on its platform.

eBay’s acquisition of Caramel, which aims to simplify online vehicle purchase, is anticipated to boost vehicle sales on the former’s platform and allow it to tap into the total addressable market for collectible cars in the US, which is estimated at $75 billion. In addition, it is anticipated to help drive cross-category sales in vehicles and P&A.  

The ecommerce leader’s geo-specific initiatives, particularly in the UK, have been yielding benefits. The removal of seller fees helped drive deals within focus categories and mid-to-high ASP items. In the fourth quarter, the company saw double-digit improvement in consumer-to-consumer (C2C) GMV growth.

eBay has introduced a buyer protection fee for UK C2C transactions, alongside features like eBay Balance and Managed Shipping. It is also working on improving its pickup and drop-off capabilities for heavy items. These initiatives are anticipated to help unlock a sizable market opportunity from the inventory in consumers’ homes.

eBay is now testing eBay listings on Facebook marketplace in partnership with Meta in the US, Germany and France. This will provide it access to a wider audience enabling it to broaden its reach and drive sales.

Outlook

For the first quarter of 2025, eBay expects revenue of $2.52-2.56 billion, which is expected to be down 1% to up 1% YoY on an FX-neutral basis. GMV is expected to be $18.3-18.6 billion, flat to up 1% on an FX-neutral basis. Adjusted EPS is forecast to be $1.32-1.36, up 6-9% YoY.