What Goes Up Must Come Down, EBay Warns Investors
Like so many similar companies in the same boat, EBay Inc. has noted the boost in sales associated with pandemic-induced shopping trends and government-issued stimulus payments may be coming to a close, and so warned its investors that what went up will surely be coming back down.
Shares in the online marketplace platform took a 7 per cent drop in extended trading Wednesday after EBay issued a revenue forecast for the current quarter that predicted spending on the site could slow down as life resumes normality. This is based on the expectation that more people get vaccinated, businesses re-open and people have spent their stimulus cheques.
EBay has issued a statement revealing its sales to be US$2.98 billion to US$3.03 billion in the second quarter. Earnings, excluding some items, will be 91 cents to 96 cents a share. Analysts estimated profit of 98 cents a share on sales of US$2.95 billion.
Investors must now question whether the change in shopping habits will continue beyond the initial pandemic-induced boom, and if shoppers will start directing their disposable income towards dining out and travel with an increase in people being vaccinated.
Gross merchandise volume, which is the value of all goods sold on the site, went up by 29 per cent in the first quarter to US$27.5 billion, surpassing the US$26.2 billion predicted by analysts.
In EBay’s case, the slowing down of business in its marketplace means the company’s CEO, Jamie Iannone, is looking at other avenues for revenue, being advertising and payments, to balance out the slow-down.
In a bees-to-honey manner, he is making efforts to boost sales in particular categories – watches and trainers – in order to attract enthusiasts, hoping they’ll then browse other areas of the site and increase their spend.