Shares of eBay (EBAY) fell after analysts at Jefferies downgraded the auction site Tuesday based on slowing advertising revenue growth.
The firm dropped eBay to “underperform” from “hold” and lowered its price target to $52 from $60. That’s an 18% discount even after the company's stock slid 3% to $63.09 intraday Tuesday.
“We see decelerating advertising revenue combining [with] increased marketing investments for sluggish profit growth,” the analysts said.
Analysts added the company is “a key ecommerce player, but has been unable to deliver sustainable progress towards a core marketplace turnaround.”
Advertising growth dipped from 23% in the fourth quarter of 2023 to 7% in the third quarter of 2024. That’s due in part to eBay’s reliance on offsite promoted advertisements as opposed to core-onsite advertising, since the former requires eBay to pay for ad placement, Jefferies said.
Jeffereis also noted that revenue growth from China fell from 26% in the third quarter last year to 10% this year. If that trend continues, it could become a headwind, the firm said.
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