This is not a good week for eBay. The company’s stocks took a massive tumble a day after revealing that it was slashing about 300 jobs in the Bay Area.
eBay informed the Employment Development Department of California of its move to cut about 300 jobs in the area by Friday, July 20. The affected employees were reportedly notified last month that they were being laid off.
eBay is firing nearly 300 employees across the Bay Area, @techchronicle reports: https://t.co/A4SNYkH0AP
— San Francisco Chronicle (@sfchronicle) July 18, 2018
The retail giant later reported its second-quarter earnings to its investors. The company secured a net profit of 64 cents per share, which was above what analysts projected. However, its warning that the present quarter’s revenue would go down resulted in a selloff that saw eBay’s stocks fall by 10 percent, ending in $34.11 per share.
eBay also reported that its expected full-year profit will be around $10.75 billion to $10.85 billion, down from its previous estimate of about $10.9 billion to $11.1 billion. The company also lowered its expectations regarding its third-quarter earnings per share to somewhere between $0.54 and $0.56.
eBay stock has worst day in nearly two years after weak growth, lowered revenue forecast https://t.co/ZbLHNkZngM
— CNBC (@CNBC) July 19, 2018
News of the layoffs and the drop in stock prices is typically something to be worried about. Conventional wisdom dictates that cutting jobs should lead to a boost in share prices. After all, reduced cost means better profits. eBay certainly looks at it that way, as the company stated that the savings it made the previous quarter will provide them with additional funds to spend on marketing.
eBay has been relatively quiet the past few years, particularly when compared to rival Amazon. But despite losing its luster, the company has been performing steadily. Its stock prices even reached a high $36 per share last January. This capped a 139 percent gain of the past five years. Unfortunately, shares have dropped 27 percent since then.
Some Wall Street analysts have said that this drop in shares is puzzling, as the company continues to make progress with its key initiatives. They noted that the company is still “losing market share at a time when eCommerce, in general, is thriving.” One analyst even said that this could be due to eBay customers not bringing in new buyers to the platform.