What: Shares of eBay (NASDAQ:EBAY) fell more than 13% early Thursday after the e-commerce giant reported solid fourth-quarter 2015 results, but followed with disappointing guidance.
So what: Quarterly revenue was flat on a year-over-year basis at $2.32 billion, while adjusted net income from continuing operations fell 12% to $600 million. Thanks to stock repurchases over the past year -- including $550 million spent during the quarter to buy back 19.9 million shares -- eBay's adjusted earnings per share fell a more modest 10% year over year to $0.50. Both figures were in line with analysts' consensus expectations.
To be fair, note revenue came in above the midpoint of eBay's guidance for $2.275 billion to $2.235 billion, and adjusted earnings per share were well above the high end of eBay's expected $0.47 to $0.49 range.
Digging deeper, eBay's top line was the result of flat gross merchandise volume (GMV) of $21.9 billion, as reported. On a constant-currency basis, both revenue and GMV would have climbed 5% -- a happy consequence of 5% growth of eBay's active buyer base to 162 million. Within that, Marketplaces GMV declined 1% to $20.7 billion, resulting in revenue of $1.9 billion, while StubHub GMV climbed 30% to $1.2 billion, resulting in revenue of $232 million.
Now what: While the market might have been fine with eBay's fourth-quarter results, it was decidedly less impressed with guidance. For the current quarter, eBay anticipates revenue of $2.05 billion to $2.10 billion, or currency-neutral growth of 3% to 5%, and adjusted earnings per diluted share (from continuing operations) of $0.37 to $0.39. Analysts, on average, were looking for adjusted earnings of $0.48 per share, and revenue of $2.15 billion.
For the full year 2016, eBay expects revenue of $8.5 billion to $8.8 billion, or currency-neutral growth of 2% to 5%, with adjusted earnings per share of $1.82 to $1.87. By contrast, Wall Street was looking for adjusted earnings of $1.98 per share on higher revenue of $8.99 billion.
That's not to say eBay's results were so far off the mark as to merit quite this level of pessimism. And with shares now trading at a mouth-watering 12.5 times trailing-12-month earnings and just 10.2 times next year's estimates, it's not hard to argue that pessimism is fully baked into eBay stock today. Considering eBay continues to expect steady currency-neutral growth from here as it adjusts to being a stand-alone company following its split from PayPal two quarters ago, I think the stock could reward investors willing to take advantage of this pullback.
Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends eBay and PayPal Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.