Ebay forecast disappoints amid competition from Amazon, Walmart

Ebay Inc forecast first-quarter revenue below analysts' estimates on Tuesday, as the e-commerce company faces fierce competition from Amazon.com Inc and Walmart Inc.

Shares of San Jose, California-based Ebay were down about 5% after the bell.

"The relative growth rates of Ebay's business versus Walmart's e-commerce efforts suggests Ebay is losing market share to Walmart in the category," D.A. Davidson analyst Tom Forte said.

Facing stiff competition in its marketplace business, Ebay has shifted focus to its advertising and payments businesses, as well as worked to make its platform simpler to use by adding features such as grouped listings and personal recommendations.

"I'd say Amazon is still the primary culprit", said Benchmark analyst Daniel Kurnos.

Ebay slashed nearly $116 million (88.3 million pounds) in marketing expense in the fourth quarter in line with its continued effort to cut costs.

"They (Ebay) also pulled back on marketing, basically giving up more share back to the marketplace in certain unprofitable channels," Kurnos added.

The company is also reeling under pressure from activist investors to hive off some of its businesses to improve profitability.

Following pressure from Elliott Management Corp and Starboard Value, eBay in November agreed to sell its ticketing unit, StubHub, for $4.05 billion to ticket reseller Viagogo Ltd.

For the first quarter, Ebay expects revenue of between $2.55 billion and $2.60 billion, while analysts were expecting $2.64 billion, according to IBES data from Refinitiv.

However, the company's revenue of $2.82 billion in the fourth quarter came in above analysts' expectation of $2.81 billion.

Gross merchandise volume, which is the value of goods sold on its websites within a certain time frame, fell 5% to $23.3 billion.

Ebay said active buyers grew 2% to 183 million in the quarter from a year earlier, but they remained unchanged from the third quarter.

Growth in active buyers was impacted by the reduced marketing spend and a higher churn than what the company had expected, Chief Financial Officer Andrew Cring said on a post-earnings call.

Net income from continuing operations fell to $558 million, or 69 cents per share, in the quarter ended Dec. 31, from $763 million, or 80 cents per share, a year earlier.

On an adjusted basis, the company earned 81 cents per share, above the average analyst estimate 76 cents.