With a Friday closing price of $22.55, eBay (EBAY) is trading less than a dollar away from its 52-week low, and dangerously close to its lowest level in five years. Barron's Eric Savitz thinks the stock will drop further still.
eBay is facing sellers unhappy with recent changes to the fee structure of sales and auctions. Some of these sellers are sufficiently frustrated that they are leaving eBay and selling items through their own websites. A slowing economy is hitting eBay's profits, as is a strengthening dollar since over half of the company's revenue comes from outside the U.S.
However, some analysts believe the problems still to come will be even worse. Last week, Brian Blair and Ryan Hunter of investment-research firm Wedge Partners noted that eBay's business is "deteriorating," and that the company is preparing to fire as many as 10% of the company's 15,000 person workforce. Blair and Hunter also think that eBay is close to unveiling a new search platform it has been testing; a failure could be disastrous, as "the ability to search and find an item with accuracy is a key factor in eBay's success."
- In August, eBay (EBAY) announced plans to focus on fixed-price sales rather than auctions. eBay is hoping the move will help it compete more effectively against online retailers like Amazon (AMZN).
- eBay (EBAY): Q2 EPS of $0.43 beats by $0.02. Revenue of $2.2B vs. consensus of $2.17B. Sees Q3 EPS of $0.39-$0.41, short of consensus of $0.41, and revenue of $2.10-2.15B vs. consensus of $2.18B. [PR]