The Hard Numbers Behind eBay's Serious Stock Drop

eBay Inc. (NASDAQ: EBAY) may now be independent of PayPal, but the transition may not be as fluid and riskless as some of the activist investors might have hoped. eBay shares tanked on Thursday on an unusual research report, and it is not a traditional research report from Wall Street to blame.

The group behind the call is called ChannelAdvisor. It is showing a significant drop in some of eBay’s core metrics. We do not often consider a same-store sales report in eBay as frequently, but that is the culprit for Thursday’s drop.

On eBay, the report was effectively looking at the biggest slowing in over four years. ChannelAdvisor’a analysis said:

eBay’s September SSS came in at 1.1%, a decrease from August’s 3.4% and well below the e-commerce growth rate of 15% as predicted by comScore. Further in the report, we have details of the eBay internals. This is the lowest rate we have seen since February 2011. Note: we said the same last month and it’s true again this month. The next lowest period was December 2010 which was -1.7% y/y which is the next ‘low hurdle’ rate.

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In an effort to look further than just the summary data for the worst readings in over four years, ChannelAdvisor highlighted eBay details for the marketplace’s performance in September with interior data points as follows:

• eBay auctions – September eBay auction SSS were negative 31% y/y, compared from August’s negative 31.1%.
• eBay fixed-price – Came in at -0.7% y/y in September – down from August’s 0.0%. This is the lowest FP growth rate since we started breaking this out in 2011.
• eBay Motors (parts and accessories) – P+A bucked the trend of other eBay components and came in in-line with e-commerce for September at 13.3% compared to August’s 20.0%. eBay Motors P+A continues to be the bright spot in the eBay SSS results, growing fastest of all the eBay components and in-line with e-commerce.

Shares of eBay were last seen down by 7.8% at $23.69 in midday trading on Thursday. Its 52-week range is $19.50 to $29.35 (post-PayPal), and its consensus analyst price target is $32.49. What really stands out is that some 25 million shares had traded shortly after the noon hour, already 150% of a normal day’s trading volume.

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