Shares of eBay Inc. are still down, more than a week after taking a beating on Wall Street following the company's good news-bad news earnings report of July 16.
While eBay's revenue and profits for the second quarter exceeded expectations, the company also suggested that the sluggish U.S. economy would bring slower growth for the rest of the year. This news, coupled with 33 percent lower growth of gross merchandise volume vs. a year ago sent eBay stock prices tumbling to a two-year low.
Less than a week later, however, rival e-commerce giant Amazon.com—apparently immune to the same market forces—reported its profits more than doubled from a year ago, while revenue soared more than 40 percent.
The contrast further highlights eBay's struggle to reinvent itself as a more traditional retail site, a la Amazon, even as it clings to its online auction roots.
eBay's second-quarter profit rose 22 percent to $460 million and revenue for the quarter grew 20 percent to reach $2.2 billion.
The revenue and profit growth came largely on the strength of eBay's PayPal payments service subsidiary and a recent buyback of 19 million shares. eBay's e-commerce sites, known as the Marketplaces division, now represent 66 percent of total revenue, while PayPal makes up 27 percent. Telecommunications provider Skype is responsible for the remaining 7 percent of revenue.
Following the earnings announcement, eBay shares lost 14 percent of their value, dropping as low as $23.52, the lowest point since August 2006. Shares rebounded slightly, but still hovered below their pre-earnings level at press time.
Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.
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