Jim Cramer says this legacy retail company's stock is 'done'
Shares in this legacy company hit a new 52-week-low in the wake of poor third-quarter results.
Reporting third-quarter results Nov. 7, online retailer eBay EBAY forecasted profit and revenue for the current quarter below Street expectations, citing a pullback in consumer spending amid macroeconomic concerns.
"We've observed softening consumer trends to date in Q4, and particular challenges in Europe, suggesting we may see a more muted seasonal uptick over the holidays," CEO Jamie Iannone told investors on the company's earnings call. "We are focused on controlling what we can control, being prudent about our costs and continuing to drive innovation for our customers."
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The company reported a 5% increase in revenue for the quarter to $2.5 billion, about in line with analyst expectations. Adjusted earnings of $1.03 per share, likewise, were in line with Street estimates.
EBay said in a statement that it returned more than $780 million to shareholders for the quarter, including $132 million in cash dividends.
Shares of eBay plummeted following the report, hitting a fresh 52-week low of $37.17 on Wednesday. The stock is down more than 4%.
CNBC's Jim Cramer, noting weak consumer demand and a less-than-optimal free cash flow, said in response to the report that he's "done" with eBay.
"There are certain words you see and say: 'Listen, I've got to sell,'" Cramer said, taking note of the company's concern with volume uncertainty and the global economy. "I'd rather be in Costco COST, I'd rather be in Amazon AMZN, I'd rather be in Walmart WMT."
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The average analyst price target for eBay is pegged at $45.50. The current analyst consensus recommends investors hold the stock.
"This is a retailer. They are not an upstart. But I just think that the eBay file, done," Cramer said. "I want you to stick a fork in it. Stick a fork in eBay. Enough. Enough. Can you just disappoint me forever? At a certain point, I'm just going to take you off my screen."
EBay's struggles with high interest rates and a challenging macroeconomic environment are not unique; they do, however, pose a potentially bigger problem as the company struggles to compete with Amazon.
Amazon reported revenue of $512 billion in 2022, multiples above eBay's revenue of $10 billion for the year.
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