E-Commerce | EBay rattles investors already spooked by threat of Amazon

EBay Inc. rattled investors by trimming its annual revenue forecast, signaling that the online marketplace is losing momentum as the critical holiday season approaches. Shares dropped 6.6 percent in early trading yesterday, with investors also concerned about slow customer growth.

The reduced revenue projection, on top of lackluster sales for the second quarter, revived concerns that EBay is struggling to find its place in the shadow of online retail behemoth Amazon.com Inc. It’s also facing greater competition from brick-and-mortar stores like Walmart Inc., which are improving their own digital-shopping options.

“When you’re in e-commerce and growing at half the rate of the overall industry, that’s not going to cut it,” said Josh Olson, an analyst at Edward Jones & Co. “Investors don’t come to e-commerce for value. They come to e-commerce for growth.”

Annual revenue will be USD10.75 billion to $10.85 billion, EBay said Wednesday in a statement. The company in April projected $10.9 billion to $11.1 billion in sales for the year. Sales will be $2.64 billion to $2.69 billion in the third quarter, while analysts were projecting $2.73 billion. Quarterly earnings per share, excluding some costs, are forecast to be 54 cents to 56 cents, compared with analysts’ average estimate of 56 cents.

In the second quarter, EBay’s profit was 53 cents a share on revenue of $2.64 billion, according to a statement Wednesday. Total gross merchandise volume, a key metric, rose 10 percent to $23.6 billion. Active customer accounts grew 4 percent to 175 million.

“The buyers on EBay are engaged, but they’re not bringing enough new customers to the platform,” said RJ Hottovy, an analyst at Morningstar Inc. “They’re doing some interesting things, but it’s tough to compete with Amazon.”

The shares fluctuated after the earnings were announced, tumbling as much as 6.4 percent in extended trading Wednesday before rising almost 2.5 percent – and then slipping again by more than 5 percent. The stock had closed at $37.95 in New York. EBay shares have see-sawed this year, peaking at $46.19 in February after the company announced it would lower costs by using Adyen BV for payments processing rather than longtime partner PayPal Holdings Inc. It gave the gains back in April after issuing a disappointing second-quarter revenue forecast. Bloomberg