E-commerce and auction site eBay's efforts to focus on faster-growth markets such as fashion resale and collectibles has resulted in more layoffs as it prioritizes its investment spending.
The company has told employees it is trimming staff -- some reports put the number at 9% of its workforce. A spokesperson confirmed the move, telling Barron's that "we shared the difficult news that we plan to reduce a portion of our workforce. As we work to capture the significant opportunity ahead, this step was taken to ensure we continue to operate from a position of strength by aligning our teams and resources with our top strategic priorities."
The cuts will affect about 1,000 employees, the spokesperson said, although eBay will still hire in "priority areas aligned with our strategy." The news was first reported by Reuters.
Earlier this year, eBay announced plans to cut about 800 jobs as part of a strategic restructuring.
Shares of eBay were up 1.5% on Wednesday afternoon, at $122.97.
StoneX Financial analyst Daniel L. Kurnos noted that the shares are up more than 12% since mid-September. The stock move underscores just how conservative Wall Street analysts had been with their estimates, he said, and shows "how much momentum we believe the Company still has behind them as we head into the all-important holiday season."
Like other e-commerce companies, eBay has faced the challenges of higher gas prices and incremental unrest in Europe. But despite this, "eBay continues to press all the right buttons," he said in a note on Wednesday. He rates the stock a Buy with a $136 price target.
The analyst specifically cites the company's eBay Live, an interactive shopping platform embedded in its app and website, and more broadly the growth of its resale, or recommerce, business, which despite investor misgivings, suggest that "eBay is actually taking share."
In late August, eBay closed its acquisition of Depop, a London-based consumer-to-consumer resale site popular with Gen Z and Millennials for its "pre-loved fashion," for $1.4 billion in cash, in a move to attract younger customers and expand its reach in the resale market.
The company said its survey of users and sellers found that 70% of global consumers consider secondhand shopping important for managing their household budgets, and 47% buy secondhand goods at least once a month.
For next year, Kurnos sees a baseline scenario of continued growth in the 60% of eBay's business that gets called non-focus categories.
EBay reports third-quarter earnings on Oct. 28. The analyst notes that it has beaten consensus estimates for five straight quarters, "and we do not see any fundamental reason that this should not be a sixth."
Even though its valuation remains a bit stretched, as long as the numbers continue increasing, "we think eBay will continue to surprise to the upside and trudge higher," he added.
The company's stock notched a new closing high on Oct. 15, days after Morgan Stanley analyst Nathan Feather named it a top stock pick. The stock is up 41% this year and up 29% over the past 12 months. The S&P 500, in comparison, is up 13.2% this year.
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