eBay Inc's stock plummeted 5.03% in pre-market trading on Tuesday, following a downgrade by Jefferies analysts who cited concerns over the company's core marketplace business and slowing advertising revenue growth.
Jefferies analyst John Colantuoni slashed his rating on eBay to "Underperform" from "Hold" and lowered the price target to $52 from $60. The analysts argued that eBay's core marketplace has struggled to balance growth and profitability, with its adjusted EBITDA for the segment declining by 50% since 2019 due to contracting margins.
Moreover, the analysts expressed concerns about eBay's reliance on advertising and payments to drive revenue and earnings growth. They warned that the anticipated slowdown in advertising revenue could eliminate a key source of margin and reinvestment capabilities for the company, resulting in downside risks to both gross merchandise volume and EBITDA.
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