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eBay’s Profit Guidance Disappoints amid Firm’s Major Platform Revamp
eBay Inc. issued a second-quarter profit guidance that missed analysts estimates, as the online firm focuses its spending on overhauling and marketing its e-commerce platform in a bid to keep up with its rivals.
Shares of the firm lost 2.5 percent to trade at $33 per share after the bell.
eBay is transforming its platform in a bid to attract more shoppers, as well as to better perform in a market that has tough competitors such as Amazon. The revamp meant transitioning away from its previous format of online auctions towards fixed-price sales and product landing pages, which are easier to navigate compared to the dozens of listing sellers would make for a single item to be sold.
The company has also bolstered its marketing budget by launching a rare TV campaign before 2016's holiday shopping season. This caused sales and marketing expenditures to jump 4.5 percent to $562 million in Q1, while spending on product development surged 16.3 percent to $278 million.eBay expects Q2 adjusted profit to clock in between 43-45 cents per share. The guidance range was lower than the projected profit of 47 cents per share. But the firm stood by its earlier full-year profit estimate of $1.98-$2.03 per share and expressed its expectation for more growth in the second half of the year.
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