EBay shares sink 10 percent in wake of weak holiday forecast

When it comes to the Christmas shopping season, San Jose’s eBay has already been scratched off many people’s wish lists.

Well, at least its stock has by many of its investors.

EBay shares fell by as much as 10.5 percent, to $29.07 Thursday, one day after the online e-commerce giant said the historically strong end-of-the-year holiday shopping period will leave it with more like a lump of coal in its stocking instead of a pile of presents under its Christmas tree.

Late Wednesday, eBay said that for its fourth quarter it expects to earn 52 cents to 54 cents a share, on revenue in a range of $2.36 billion to $2.41 billion. Analysts surveyed by Thomson Reuters had forecast eBay to earn 54 cents a share on $2.4 billion in sales for the quarter that ends in December.

EBay also reported a third-quarter profit of 45 cents a share on $2.22 billion in revenue, up from a profit of 43 cents a share on sales of $2.1 billion a year ago. Analysts had forecast eBay to earn 44 cents a share on $2.19 billion in revenue.

One of the issues eBay is dealing with is its image. Millennials in particular are seen as a key demographic group for eBay’s future success. However, they aren’t coming to eBay’s storefront as much as other sites such as Amazon due to a perception that eBay is mostly a repository for the old stuff that used to belong in your grandparents’ attic instead of a place that has a modern shopping experience.

On a conference call with industry analysts, eBay Chief Executive Devin Wenig said the company is focusing its marketing efforts toward becoming a site for good deals on well-known brands and not just “gently used” clothing and other items. Wenig said it will take more than a year for eBay’s strategy to bear fruit.

The outlook threw some cold water on what eBay is calling its “structured data” initiative. By using structured data, eBay is aiming to cut the costs of acquiring online traffic, boost user growth and improve users’ shopping experiences by making it easier to find the best products they want.

Analyst Gene Munster, of Piper Jaffray, said in a research note Thursday that while it is “nice to have” structured data, “we believe eBay faces structural brand and product issues that are not going to be solved by structured data, which is more of a necessity for a modern website than a new user acquisition tool or a differentiating feature.”

With eBay’s outlook failing to spark investors’ enthusiasm, Munster may have just summed up the state of the online marketplace and how it’s testing its investors’ patience.

“EBay’s place on the internet is not changing,” Munster said.


Photo: A sign at eBay headquarters in San Jose in 2013. (Gary Reyes/ Bay Area News Group)


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