Shares of popular online auctioneer eBay, Inc. were near flat in mid-afternoon trading Thursday, rallying back from an early morning slide amid concerns about a bigger-than-expected drop in the total number of items listed on its Web site.
Although the company posted sharply higher quarterly results Wednesday, an investment analyst issued a sell recommendation because fewer items were listed on the Web site.
Derek Brown of Cantor Fitzgerald shrugged off eBay's stellar results, including a whopping 50 percent advance in second-quarter net income. He said once your dig through the numbers what you find a disturbing fact: the number of items put for up for sale slid 6 percent from last year.
"Their core franchise, the buying and selling of goods and services on eBay.com, continues to lose marketshare at what we think is a pretty rapid rate. And we would recommend investors sell the stock and find better opportunities elsewhere," said Brown.
By mid-afternoon auctioneer's shares were off 60 cents, or 1.76 percent, at $33.45 on Nasdaq – reversing an early morning tumble of more than $1. More than 27.5 billion shares had traded.
San Jose, Calif.-based eBay reported Wednesday that net income for the second-quarter ended June 30, surged to $375.8 million, or 27 cents a share, compared with $249.9 million, or 17 cents per share in the year-ago period.
Revenue was $1.83 billion, a 30 percent increase from $1.41 billion.
Gains were attributed to robust auction sales and other divisions such as PayPal, which enables any individual or business with an e-mail address to securely, easily and quickly send and receive payments online.
PayPal's revenues totaled a record $454 million in the quarter, climbing 34 percent over $339 million last year.
The company's telecommunications company Skype rocketed 103 percent to a record $90 million in the quarter compared with $44 million last year.
Executives said in a conference call Wednesday that revenue would continue to outstrip growth in listings.
That's a trend that troubles Rick Munarriz, who researches technology companies for The Motley Fool. "The company is milking more out of each transaction," Munarriz said. "There comes a point where the end user isn't going to like being nickeled and dimed. So this could backfire."
But on Wednesday eBay executives downplayed the drop in listings, saying it's working diligently to improve the users experience and drive more sales.
The cyber forum sells more than 50,000 categories of merchandise — from Beanie Babies to fine antiques – hosts about 300,000 online stores worldwide. It boasts more than 220 million registered users.
From NPR reports and The Associated Press