Shares of KE Holdings Inc. (NYSE: BEKE) plunged 8.93% in Tuesday's pre-market trading session following the release of the company's fourth-quarter 2024 financial results. Despite reporting strong revenue growth, the Chinese real estate platform's earnings fell short of expectations and margins declined, spooking investors.

KE Holdings, which operates the Beike online and offline housing transaction and services platform, posted net revenues of 31.1 billion Chinese Yuan ($4.26 billion) for Q4, representing a 54.1% year-over-year increase and beating analyst estimates of $4.01 billion. The company's gross transaction value (GTV) surged 55.5% to 1.14 trillion Chinese Yuan ($156.7 billion), driven by growth across all segments.

However, adjusted earnings per ADS of 1.19 Chinese Yuan ($0.16) missed the consensus estimate of $0.26. Gross margin declined to 23.0% from 25.5% in the same period last year, primarily due to a reduced contribution margin from existing home transaction services and lower contribution margin from emerging and other services. This margin compression appears to be a key concern for investors, outweighing the strong top-line growth.

The company also announced a final cash dividend of $0.12 per ordinary share, or $0.36 per ADS, which may have been viewed as insufficient by some investors given the company's cash position of 61.6 billion Chinese Yuan ($8.4 billion) as of December 31, 2024. While KE Holdings highlighted its active growth strategy and ecosystem optimization efforts, the market's negative reaction suggests concerns about the company's profitability and ability to maintain its growth trajectory in the competitive Chinese real estate market.