Shares of eBay (EBAY +3.42%) declined on Thursday after the online marketplace operator's profit forecast fell short of investors' expectations. As of 1:55 p.m. ET, eBay's stock price was down more than 14%.
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Solid sales and cash flow growth
eBay's third-quarter revenue rose by 9% year over year to $2.8 billion. The e-commerce company's gross merchandise volume (GMV) -- the total value of all merchandise sold on its marketplaces -- increased by 10% to $20.1 billion. eBay earns revenue from its GMV from the fees it charges sellers.
NASDAQ: EBAY
Key Data Points
eBay is integrating artificial intelligence (AI) features into its platform to facilitate transactions between buyers and sellers. The company recently unveiled a new AI-powered messaging tool and other tech upgrades to help sellers grow their sales and profits.
"We're transforming the eBay experience through AI built on 30 years of unique insights, while enhancing trusted programs in shipping, live commerce, and circular fashion," CEO Jamie Iannone said in a press release.
Moreover, eBay's asset-light business model remains highly profitable. The marketplace provider produced $803 million in free cash flow from continuing operations during the third quarter. That enabled eBay to return $757 million to shareholders via dividends and stock buybacks.
Tariffs could slow eBay's growth
Investors, however, appeared to focus more on eBay's business outlook. Management guided for adjusted earnings per share of $1.31 to $1.36 in the fourth quarter. That was below analysts' estimates of $1.39.
During eBay's earnings call, CFO Peggy Alford said the suspension of the de minimis exemption for imports under $800 for tariffs in late August began to negatively impact transaction volumes in September.
