What happened

Shares of eBay (EBAY 0.48%) got crushed on Thursday after the company reported financial results for the first quarter of 2021. Q1 results were actually quite strong, but Wall Street didn't like the company's forward guidance. As a result, the stock was down 11% as of 10:15 a.m. EDT.

So what

For Q1, eBay's revenue grew to more than $3 billion, which was up 42% from the comparable quarter last year. And net income was even better, sporting a year-over-year increase of 45%. During the quarter, the company also generated $855 million in free cash flow (FCF), which was available for buying back shares and paying its quarterly dividend. For a company as mature as eBay, this was a stellar quarter.

A frustrated investor places hands on his face with a downward-trending stock chart in the background.

Image source: Getty Images.

eBay's platform surged in popularity as the COVID-19 pandemic confined people to their homes. It seems everyone started noticing things lying around and put them up for sale. For evidence, consider that there aren't that many more people on the platform than before. Active sellers were only up 8% from last year, and active buyers were only up 7%. But these eBay users have been far more active during the pandemic.

Now what

Modest user growth explains why eBay's outlook is tepid. As we move farther away from the coronavirus lockdowns, its business seems to be normalizing. Management is guiding for second-quarter revenue of $2.98 billion to $3.03 billion, which is 12% to 14% year-over-year growth. However, that's flat from Q1. This is why multiple Wall Street analysts downgraded their outlook for eBay stock this morning, according to The Fly.

However, consider that eBay has generated nearly $3 billion in FCF over the past four quarters, meaning the stock trades right around 12 times trailing FCF. That's a value stock in today's market and could be a good bargain if this company continues to make progress on new revenue-growth drivers like managed payments and promoted listings.