eBay shares sink on weak holiday forecast
Online e-commerce giant seeks to woo millennials, change perception that site is repository for used items
eBay shares fell nearly 11 percent Thursday, a day after the online e-commerce giant forecast weak earnings for the historically strong end-of-theyear holiday shopping period.
Late Wednesday, San Josebased 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.
Shares closed at $29.02 on Thursday, down 10.76 percent.
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 facing eBay 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 old, used items.
On a conference call with industry analysts, eBay Chief Executive Devin Wenig said the company is focusing on providing a modern shopping experience where custom- ers can find good deals on well-known brands — and not just “gently used” clothing and other merchandise. 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.
Piper Jaffray analyst Gene Munster 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.
“eBay’s place on the internet is not changing,” Munster said.