eBay Shares Tumble (Update)

SAN FRANCISCO - eBay's(EBAY Quote) second-quarter earnings beat wasn't enough to overcome investors' disappointment late Wednesday over the company's failure to show meaningful growth.

Shares of eBay were off 6.6% in recent after-hours trading to $26.24.

Gross merchandise volume -- the total value of all goods sold on eBay -- totaled $15.68 billion, an increase of 8% over the same period last year but a drop from the 12% year-over-year growth seen in the first quarter.

Excluding favorable foreign currency exchange, gross merchandise volume grew only 4% in the second quarter.

The online auction giant blamed the slowing economy and a drop in the average selling price for items trading hands on its site.

"The good news is that buyers are getting a good deal but we don't convert that to higher (gross merchandise value)," said John Donahoe, chief executive officer of eBay, during a conference call with analysts.

The auto category was particularly weak, showing no growth in gross merchandise value in the second quarter vs. 7% in the first quarter.

Although eBay's listings swelled by 19% from a year ago, the number of active users increased by only 1%. Donahoe also noted that the company was hurt by higher discounting offered to the company's active "power sellers" for improving their ratings, as well as by coupons to buyers to retain customer loyalty.

Donohoe said eBay intends to keep tweaking the site to improve the user experience and draw in more people.

"We're going to take these actions and bear the short-term risks," he said.