When you always outperform, investors always expect you to outperform. And when you disappoint, investors are going to be extra disappointed.
After the bell yesterday, eBay
The company's outlook was also light. eBay forecast first-quarter earnings before items of $0.34 to $0.35 per share on revenues of $1.01 billion to $1.03 billion, well short of the analyst estimate for earnings of $0.40 per share on $1.05 billion in revenues. The company also said that it expected fiscal 2005 earnings of $1.48 to $1.52 per share on revenues of $4.25 billion to $4.35 billion. That, too, is short of the analyst estimate of $1.61 in earnings for the year on $4.37 billion in revenues.
As a result, eBay shares traded down nearly 18% to around $85 a share in today's trading.
Though the numbers didn't quite make expectations, the business is still growing rapidly. eBay's international business led the way, with net transaction revenues surging 64% to $344.3 million -- almost matching the $362.7 million in net transaction revenues the company recorded in the U.S. Meanwhile, the PayPal payments business posted net transaction revenue growth of 53% to $200.2 million.
Total gross merchandise volume (GMV), the value of the items successfully traded on eBay, rose 39% to $9.8 billion during the quarter. eBay Motors, by far eBay's largest trading category (as we discussed a couple of months ago in "Investing in Car Culture"), continued to outpace overall growth, with annualized GMV climbing 48% to $11.1 billion.
At 60 times 2005 earnings, eBay's stock still carries a premium valuation. That said, there isn't much wrong with the actual business. Last week, the company announced a hike in its listing fees (see "eBay, Hike, and Other 4-Letter Words"), hoping to capitalize on its network advantage over auction competitors such as Yahoo!
Yesterday, eBay also announced a two-for-one stock split, payable Feb. 16.
For more on eBay, check out:
- eBay Goes Phishing
- eBay Gives a Dime
- eBay's Indian Sex Scandal
- eBay's Rental Insurance
- eBay of the Elves
Fool contributor Jeff Hwang owns shares of both eBay and Overstock.com.