. eBay’s stock opened at $17+ and slumped to $15.75 a new low just hours ahead of the call.
eBay will report earnings at a 2:00 PM (Pacific – 5:00PM Eastern) investor call todayEarlier eBay said it would meet earnings estimates, but investors were hoping for more. Part of the fall is uncertainty about eBay but the market is also down after Fed Chairman Bernanke predicted a long recession and tougher times ahead. If eBay beats estimates it could cause a small rebound from the lows –but then the market will take a couple of days to digest the numbers.
If listings and income from sales fees are up then eBay is still on track for growth –but if earnings come from other areas, I think the stock will correct after a small bump.
One of the problems is the nature of what sells on eBay today. eBay has spent the past couple of years transforming eBay from a place where you could buy anything –new or used, into a major shopping site for new consumer products. But in a recession, it is these new consumer products that are hurt the most.
When the economy slows people look for bargains, niche products and even used products. But these are the sellers that eBay is pushing away in favor of large merchants with hot products. Retail sales fell in September and retailers are predicting that October will be worse. So the worst of the news may not be in these quarterly results that ended in September.
It will be interesting to see how eBay fares over the next few days. I will update this later today after the announcement.