Shares of Hepsiburada (HEPS 0.84%) were plunging today after the Turkish e-commerce company slashed its forecast for the current quarter and the full year in response to the lifting of pandemic restrictions. The company also announced an advertising partnership with Meta Platforms' (META 1.30%) Facebook, but the market overlooked that in favor of the reduced outlook.
As of 12:38 p.m. EST, the stock was down 34.8%.
In a press release this morning, Hepsiburada said that customer mobility increased in response to the end of COVID-19 restrictions, and online card spending in Turkey fell significantly.
The company also said that competition intensified and the company responded by discounting more items and spending more on advertising. It sees those challenges lasting into the fourth quarter as well.
As a result, the company now expects revenue of $164 million in the third quarter, down about 7% from second quarter results. For the full year, it sees gross merchandise volume of $2.4 billion, down substantially from its prior forecast of $2.8 billion to $2.9 billion.
Hepsiburada also said that it is launching a new advertising partnership with Facebook, for "managed partner ads," running from more than 10,000 small and medium-size businesses (SMBs). The partnership will enable the SMBs that sell on Hepsiburada to easily place targeted ads on Facebook and Instagram to increase traffic by as much as 10 times and boost sales.
Nonetheless, that news was overshadowed by the guidance cut.
Hepsiburada, which debuted on the market in July, has fallen sharply since it warned about the headwinds from reopening in its second quarter report in August. The stock is now down 71% since the initial public offering, which could be more of a reflection of the challenges that many e-commerce stocks are facing in the reopening, and not any fundamental flaw with the business.
The third-quarter earnings report is due out on Nov. 23, but the reduction in guidance means there are unlikely to be any surprises.