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eBay stock plunges to yearly low on competition worries

eBay Inc. (EBAY) stock hit the yearly low of $30.75 on Thursday as the online retail company is struggling against giants like Amazon (AMZN), Walmart (WMT) and Alibaba Group (BABA). With results for the third quarter is set for this month-end, investors are concerned about the impact of Amazon and their marketing strategy on the company.

In contrast, analysts expect the company’s results for the third quarter to exceed the Street’s consensus estimates. After the company reported second-quarter results, the stock fell due to a weak revenue outlook and since the second quarter earnings announcement it had dropped over 16%.

During early this month, eBay accused Amazon of poaching its merchants which has been going on for many years across all markets. Also, eBay has warned Amazon through a cease-and-desist letter about this issue with several hundreds of doctored messages in its hands claiming Amazon as accused.

Meanwhile, few market analysts expect the eBay stock to be grounded in 2018 as a whole due to the disappointment in the earnings numbers till now. They felt the company was unable to increase its user base and volume despite high consumer confidence and optimism in the e-commerce space.

Tax cuts, which got introduced a year ago, has been attributed for the high consumer confidence and thus expanding the consumer discretionary spending.

Also, eBay has been facing high debt and the amount it spends on share repurchase programs have been quite high in the past few quarters. This has been dragging down the company from spending more to get growth. The company is also required to deal with core fundamentals that are not hinting for robust growth.

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eBay has been facing raging competition in the key markets where it showed lesser growth. Also, the company is surviving in an industry that requires a higher rate of returns and growth. The retailer is not depending fully on spending cash to spur growth but the focus depends on new managed payment service and a new advertising campaign.

Shares of eBay ended Thursday’s regular session down 0.85% at $31.40 on the Nasdaq. The stock had lost over 16% so far in this year and more than 18% in the past year.

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