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Lawyers Sniff Around eBay Disclosure Practices

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eBay logoLawyers frequently target public companies on behalf of investors when there’s bad news that impacts their stock price, sometimes it seems purely by reflex.

That’s what’s happening to eBay after PayPal revealed in its earnings release last week that it experienced “softness” in its eBay business.

Analysts and investors worried that what PayPal experienced could be an indication of eBay’s overall performance in the third quarter, leading to a drop in eBay’s share price.

Hagens Berman Sobol Shapiro LLP issued a press release today that it was conducting an “investigation of possible disclosure violations,” stating in part:

“On October 19, 2018, an analyst reportedly downgraded eBay shares from Buy to Hold, cut the target from $43 to $35, and cited PayPal’s earnings release disclosing weak Q3 gross merchandise value (“GMV”) trends for eBay. This news drove the price of eBay shares down $2.80, or almost 9%, to close at $28.75 that day.”

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The press release quoted Hagens Berman partner Reed Kathrein: “We’re focused on investors’ losses, eBay’s upcoming earnings report and whether management may have made earlier statements about the Company’s business that could have been misleading.”

Hagens Berman may simply be on a fishing expedition; it sought help from would-be whistleblowers, reminding them of the SEC reward program.

Stay tuned – eBay reports third-quarter earnings Tuesday afternoon.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

5 thoughts on “Lawyers Sniff Around eBay Disclosure Practices”

  1. Misleading Investors? Talk about a target rich environment.

    I recall a comment by a insider where they came up with conclusions then came up with BS numbers to support them. I haven’t read their 10Qs lately but I imagine that penalizing sellers 40-55% for a return policy they encouraged would rank high in risk factors from both the legal side and the Income side from loss of sellers. If they didn’t outline the risk factors, that’s a materiel omission especially if eBay suffers loss of income from Sellers leaving or loss of assets from larger sellers suing.

    I don’t recall them bringing that up in their conference calls. Then we have the elusive product catalog that was supposed to bring order to buyers search and make search so it would incorporate artificial intelligence to now only find exactly what the buyer was looking for but would go out on the net and find out things from the connected world to make product suggestions…that has to rank up there as sellers use search and can’t find their own listings.

    The Payment service which Paypal sniped them on during their Conference call.

    The stock is down 43% from it’s 52 week high and today traded at levels we haven’t seen for 2 years or more.

    We’ll have to see how much credibility they have left after tomorrow’s call. I’m sure they will try to be optimistic about Q4 prospects. The question is, will anyone believe them?

  2. ebay and it’s mouthpiece Wenig are nothing but buzzwords and BS.
    What I know about stocks you could put on the head of a pin with a roller brush, but common sense tells me after looking at what ebay has and does with it’s money…ebay’s assets have evolved into a hologram.
    They’ve lost $8B in capitalization under Wenig. How do you price a hologram, AND bid it up?

    ebay is/was a cash cow…period. It pays NO dividends. It’s execs reap the profit. Where’s the stock VALUE? A stockholder hoping that some schmuck who is blinder than himself will see more “value” next week?

    ebay counts $5B as “goodwill”. Amazon, 30 times more cap, has just $10B.
    Did I say hologram? Make that smoke and mirrors.

  3. Wenig decimated the Balance sheet with stock buy backs in what now can be seen as a massive waste of shareholder assets used solely to keep the stock price up so Wenig and cohorts could sell at massive profits. They disguise these wasteful exercises as returning cash to shareholders. Not with dividends based on earnings, but with borrowed money to buy back stock that is retired.

    The tangible assets of the company have fallen from 6.5B to 1.8B in the last year . The debt is 9.2B which is 5 times tangible assets . The equity includes about 5B of BS good will. In Q2 they bought back 918m in stock.

    They are hurtling towards a liquidity crisis with rising interest rates and short term bonds that can’t be paid having to be rolled into new bonds that raise the cost of financing a share buyback that did nothing but hollow out the company and put real cash in the C – Suite which is really all they care about.

    Listen to Wenig. He doesn’t take responsibility for anything. See who he blames tomorrow for his shortcomings. Then again, he might be a no-show for the CC.

  4. How funny is it that lawyers are sniffing around ebay. They must have a really bad head cold to only be sniffing. The stink that arises from ebay has to have an awful smell that one wouldn’t have to be sniffing around. The stink reaks everywhere.

  5. “Dburn says:” and he couldn’t be more spot on. Keeping buying that stock Wenig and keep buying other companies (which is truly eBay’s marketplace these days). Hurling for a liquidity crisis…..you betcha!!

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