EBay forecasts profit below estimates on stiff competition, shares fall

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FILE PHOTO: The eBay logo is pictured on a phone screen in this photo illustration

(Reuters) -EBay Inc’s second-quarter profit forecast came in below market expectations as it faces fierce competition from bigger rivals including Amazon.com Inc for a slice of the pandemic-led online shopping boom, sending its shares down 6%.

While the company’s focus on its advertising and payments business and a simpler e-commerce platform have benefited its business, Amazon remains a favorite online shopping destination for most consumers.

The rise of Canada’s Shopify Inc,, which smashed earnings estimates earlier on Wednesday, has also piled on the pressure on eBay.

“Many companies are seeing growth off of the COVID-19 accelerated numbers. So this is a relative challenge for eBay to not be able to fully hang on to the gains from the pandemic,” Wedbush analyst Ygal Arounian said.

EBay said it expected current-quarter adjusted profit in the range of 91 cents to 96 cents per share, below a Refinitiv IBES estimate of $1.02 per share.

Its revenue rose 40% to $3.02 billion in the first quarter, beating expectations of $2.97 billion, thanks to the surge in online shopping during the COVID-19 crisis.

The e-commerce boom, however, is expected to slow as vaccine rollouts and easing restrictions in the United States encourage shoppers to return to brick-and-mortar stores.

“We are right on track to where we want to be from an overall margin standpoint of the business,” Chief Executive Officer Jamie Iannone said in an interview.

The company’s operating margin rose to 27.9% in the quarter, from 26.5% a year earlier.

Shares of the San Jose, California-based company were down at $58.80 in extended trading.

(Reporting by Akanksha Rana; Editing by Aditya Soni)

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