eBay (EBAY) stock plummeted 5.02% in Friday's trading session, as investors reacted to President Trump's announcement of larger-than-anticipated tariffs, which have sparked concerns of a potential recession and negative impacts on the e-commerce sector.
The new tariffs are seen as a "direct negative" for discretionary retail sales and advertising, according to a report from Bank of America. This development is particularly concerning for eBay, as the company's business model heavily relies on discretionary consumer spending. Evercore ISI analyst Mark Mahaney specifically mentioned eBay among the companies with "the most recession risk" due to its "significant exposure to discretionary spending."
The broader impact of these tariffs extends beyond just eBay, with BofA noting that the potential for increasing recession fears is "a relative negative for the entire Internet sector." Historical data shows that the sector underperformed during previous periods of recession fears, such as in 2008 and 2022. As a result, investors appear to be reassessing their positions in e-commerce and internet stocks, leading to the significant drop in eBay's share price.
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