eBay Gives Disappointing Outlook, Stoking Growth Concerns

eBay Gives Disappointing Outlook, Stoking Growth Concerns

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eBay gave a lackluster sales forecast for the third quarter and lowered its revenue guidance for the year, according to Bloomberg. Shares dropped 5 percent in extended trading.

The company said sales will be $2.64 billion to $2.69 billion in the third quarter, while analysts were projecting $2.73 billion. Earnings per share, excluding some costs, are forecast to be 54 cents to 56 cents, compared with analysts’ average estimate of 56 cents. The company also pared its full-year revenue projection, reviving concerns that eBay is struggling to find its place in the shadow of online retail behemoth Amazon.

Investors are monitoring eBay’s growth to determine if it can remain relevant. Brick-and-mortar retailers are improving their own digital-shopping options, adding more competition and pressure on eBay. In the second quarter, EBay’s profit was 53 cents a share on revenue of $2.64 billion, according to a statement. Total gross merchandise volume, a key metric, rose 10 percent to $23.6 billion. Active customer accounts grew 4 percent to 175 million.

The shares fluctuated wildly after the earnings were announced, tumbling as much as 6.4 percent in extended trading before rising almost 2.5 percent and then slipping again 5 percent. There are signs eBay is struggling. The company in June announced a reorganization that resulted in staff cuts of almost 300 employees. Software engineers and research scientists were among those let go. It could take investors time to adjust to a new strategy that sacrifices sales growth for profitability.

EBay has boosted advertising and changed the marketplace shopping experience in an effort to lure new customers to the site. It tries to differentiate itself from Amazon, which charges yearly or monthly dues for shipping discounts, by emphasizing that eBay has no membership fees to access deals that often include free shipping. It ran a day of discounts on July 16 to compete with Amazon’s Prime Day promotion.

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