Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

EBay's Slow Growth Leaves Investors Rattled

The company forecast adjusted profit in the current quarter of 46 cents to 48 cents a share, compared with analysts’ average estimate of 49 cents.
EBay headquarters | Source: Shutterstock
By
  • Bloomberg

SAN JOSE, United States — EBay Inc. shook investor confidence with a lacklustre forecast and slow growth in activity across its marketplace, highlighting its struggle to emerge from the shadow of e-commerce leader Amazon.com Inc.

The company forecast adjusted profit in the current quarter of 46 cents to 48 cents a share, compared with analysts’ average estimate of 49 cents, according to data compiled by Bloomberg. Revenue will be $2.35 billion to $2.39 billion, San Jose, California-based EBay said Thursday in a statement. Analysts projected $2.32 billion.

Chief executive officer Devin Wenig is trying to differentiate EBay in an industry dominated by Amazon, which has about double the customers, more web traffic and faster sales growth. Adding to the pressure is big investments by Wal-Mart to expand its e-commerce business as shoppers defect from stores to buy more online.

“Investors have been very patient waiting for structured data to have a meaningful impact, and we just haven’t gotten it yet,” said Aaron Turner, an analyst at Wedbush Securities Inc.

ADVERTISEMENT

EBay reported gross merchandise volume, the value of all goods sold, increased 3 percent to $21.5 billion in the second quarter, up marginally from a 2.4 percent growth rate in the previous period. The company added 2 million new buyers across its platforms — the same number as the previous quarter — for a total of 171 million global active buyers.

The company’s shares declined as much as 7.7 percent in extended trading after the earnings announcement.

In April, EBay rattled investor faith in the company’s turnaround with a forecast that fell short of most analysts’ estimates for the quarter ending June 30. Since then, a series of measures designed to match Amazon’s features has renewed Wall Street’s optimism, sending shares up 16 percent in the past three months, more than three times the gains of the S&P 500 Index.

EBay announced in June a price-match guarantee on more than 50,000 items to lure bargain hunters to its site. It is rolling out free three-day shipping on millions of products this year to compete with Amazon’s two-day shipping pledge to subscribers of its $99-a-year Prime membership. EBay emphasised its free shipping without a membership fee during a July marketing campaign designed to snag business on Amazon’s annual Prime Day sale.

The challenge is convincing investors smitten with Amazon that e-commerce isn’t a winner-take-all game. Shoppers keep shifting their spending from stores to websites, giving EBay fuel for growth even if Amazon expands more quickly. Online spending will increase 16 percent this year — more than four times the pace of overall retail — to reach $462 billion, according to EMarketer Inc.

Second-quarter profit was 45 cents a share on revenue of $2.33 billion, compared with analysts’ projections of 45 cents a share on sales of $2.31 billion.

By Spencer Soper; editors: Jillian Ward, Andrew Pollack, Molly Schuetz.
In This Article

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from News & Analysis
Fashion News, Analysis and Business Intelligence from the leading digital authority on the global fashion industry.
view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
BoF Professional - How to Turn Data Into Meaningful Customer Connections
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional - How to Turn Data Into Meaningful Customer Connections