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What you need to know
- Shares of eBay dropped Tuesday after Jefferies downgraded the stock to "underperform" from "hold."
- The firm said decelerating advertising revenue and increased marketing spending could lead to "sluggish profit growth."
- Analysts said that a slowdown in revenue growth could be a major headwind.
Jefferies analyst downgraded eBay’s (EBAY) shares on Tuesday, citing a slower growth of advertising revenue.
eBay has been dropped by the firm “underperform” You can also find out more about us on our website. “hold” It lowered the price to $50 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,” Analysts said.
Analysts have added that the company is “a key ecommerce player, but has been unable to deliver sustainable progress towards a core marketplace turnaround.”
Advertising growth dropped from 23% to 7% between the fourth and third quarters of 2023. Jefferies said that eBay relies more on promoted offsite ads than core-onsite advertisements, because the latter require eBay to pay to place an ad.
China’s Growth Slowing
Jeffereis has also reported that China’s revenue growth fell this year from 26 percent in the third-quarter of last year, to 10 percent. This trend could be a problem if it continues.
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