EBay’s Shares Tumble on Disappointing Forecast

July 20, 2017, 9:15 PM UTC

EBay on Thursday forecast current-quarter profit largely below analysts’ estimates, as it continues to invest in marketing as well as in revamping its platforms to attract more shoppers, amid stiff competition from Amazon.com.

EBay has poured millions of dollars into sales and marketing, running TV and social media campaigns, as it tries to promote its revamped platform as well as shed its image of an auctions website.

The company has also invested in product development, tweaking its websites to set a new home page, promote seller listings and remove stagnant ones.

Sales and marketing costs rose 2.4% to $637 million in the second quarter ended June 30, while product development expenses increased 6.1% to $313 million.

San Jose, California-based eBay forecast third-quarter adjusted earnings of 46 to 48 cents per share. Analysts on average were expecting 48 cents per share, according to Thomson Reuters I/B/E/S.

Net income fell to $27 million, or 2 cents per share, in the second quarter ended June 30, from $435 million, or 38 cents per share, a year earlier.

During the quarter, the company recorded an income tax provision of more than $400 million, which dented profit.

Excluding one-time items, eBay earned 45 cents per share, in line with analysts’ estimates.

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Revenue rose 4.4% to $2.33 billion, beating analysts’ estimates of $2.31 billion.

EBay also announced a $3 billion share repurchase program.

Shares of the company, up about 25% so far this year, dipped 2.4% to $36.30 in after-hours trading on Thursday.

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