EBay Slumps as Analysts Cut Price Targets After Guidance Disappoints

EBay forecasts second-quarter earnings below Wall Street forecasts.
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Shares of eBay  (EBAY) - Get Report dropped sharply Thursday after the company issued a forecast for the current quarter suggesting that spending on the e-commerce company could wane as more people get vaccinated

The stock declined 10.46% to $54.80 on Thursday.

The company expects second-quarter earnings between 91 cents and 96 cents a share on revenue of $2.98 billion. Analysts are expecting earnings of $1 a share on revenue of $2.93 billion.

Here's what analysts had to say about eBay's guidance:

Wedbush downgraded eBay to neutral from outperform while cutting its price target to $63 from $74 a share. 

"To us that means that on an FX-neutral basis eBay is giving back about half of the gains it generated y/y in 2Q20, but when adjusting for stimulus and expectations for limited-mobility induced impacts, eBay is giving back ~80% of the gains. Moreso, visibility into the following quarters as we lap Covid gains is limited as mobility increases. So we move to the sidelines as we potentially head into four quarters of negative y/y GMV growth," analyst Ygal Arounian said. 

J.P. Morgan lowered its price target slightly to $64 from $65 a share while maintaining its neutral rating. 

"Currently, eBay is showing more discipline & increasingly focused on profitable growth, and investments in Advertising and Payments should provide upside to revenue over time. However, driving Marketplace GMV growth above LSD beyond COVID-19 still looks challenging in the current competitive environment, and it will take time to re-architect the company around product & technology," said analyst Doug Anmuth.

Analysts at Barclays left their overweight rating unchanged while lowering the price target to $78 from $84 a share. 

"The “easy growth” phase for eBay appears to be in the rear view mirror, with GMV slated to decline around 10% for the rest of 2021, a function of lapping COVID tailwinds and lack of stimulus going forward," analyst Ross Sandler said.