Stock Watch: eBay Tumbles Amid Spending Concerns

Shares of eBay (Nasdaq: EBAY) fell hard on Wednesday, dropping 13-5/16 to 138-11/16 amid concerns about rising expenses. The sell off happened despite the fact that eBay reported third-quarter revenues and net income that exceeded analysts’ estimates on Wednesday. What has analysts and investors concerned is that eBay’s revenue per user has dropped significantly in the past year, falling from $16.69 to just $7.60. Despite outperforming expectations, eBay’s results did not meet the so-called whisper numbers that were circulating on Wall Street. In addition, eBay plans to continue to heavily invest in bolstering its infrastructure and improving its customer support, and this will hurt its margins in upcoming quarters.

On Wednesday, Deutsche Banc Alex. Brown downgraded eBay from buy to market performer, while Sand Brothers reduced its rating on the stock from buy to neutral. The holiday season is expected to be big for eBay, but that clearly isn’t enough to make investors bullish on this stock right now.

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