eBay’s shares slide as customers trade down

eBay saw its shares slide almost 7pc after the online aution website reined in its earnings expectations as the UK and US economies weaken. eBay told shareholders that it now expects revenues of betwen $2.1bn and $2.15bn for the third quarter, below analysts’ previous estimates of $2.17bn for the period.The value of the items sold on eBay’s sites climbed 8pc during the second quarter, the smallest rise since the first quarter of 1999. The slowing growth of online shopping pushed the average sale price of items on eBay down by 6pc, the group said.Robert Swan, the group’s chief financial officer, said customers were “trading down to lower-priced items”, especially in the US and the UK. He added: “We’ll feel the effects of that until the economy rebounds.”

The news cast a shadow over the group’s 22pc rise in pre-tax profits to $460.3m for the quarter, helped by faster growth in eBay’s other businesses, such as Skype and payment service PayPal. The company also said its global presence helped offset the effects of the falling US dollar.
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Despite evidence of slowing growth at eBay, chief executive John Donahoe said: “We have made bold moves across the eBay marketplace to accelerate long-term growth. We remain confident in our strategies to improve the customer experience as we manage in an uncertain economic climate.”

Shares in the company fell 6.7pc to $26.21 in after-hours trading. eBay’s shares have tumbled 20pc so far this year.

eBay recently won an important legal victory against Tiffany after the jeweller sued it over counterfeit goods sold on its marketplace.