EBay Shares Down 9% Following Failure to Show Growth

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EBay Inc shares dropped as much as 9.4% in Thursday trading following their second quarter earnings report that demonstrated their efforts to grow the business have yet to yield positive results.

The company reported an adjusted earnings of 53 per share and revenue of $ 2.64 billion.  However, the FactShare consensus was for EPS of 51 cents and revenue of $2.66 billion.

EBay (EBAY) -7.54% also lowered its full-year revenue to between $10.75 billion and $10.85 billion from earlier estimates of $11.1 billion.

Raymond James gave EBay’s shares a downgrade from strong buy after the earnings announcement citing initiatives that are “ramping slower then expected” and challenges to StubHub’s growth that will more then likely remain through the near term.

“EBay also noted that it does not expect some f its key initiatives to delivery stronger growth until later this year (e.g. structured data/product based experiences, brand advertising),” Raymond James analysts led by Aaron Kessler wrote in a note.  “Also, while buyers are responding well to new buyer experiences, this has yet to translate to improving conversion from existing users.”   (Source:  Marketwatch, “EBay shares drop 9% after turnaround efforts fail to result in growth”)

Raymond James lowered its target price from $51 to $46.

“At first blush, Q2 results looked decent on paper,” said Benchmark analyst Daniel Kurnos in a note.  “Digging deeper, however, revenue came in light as mix continued to negatively affect the take rake, whie the 2-cent beat in EPS was largely driven by a lower tax rate and $989 million in share repurchases.”

Meanwhile, EBay’s Chief Executive, David Wenig said the company was going to put its main focus into delivery and new buyer experiences.  They also are pursuing other efforts in order to improve the business and results.