The Stock is Not Getting a Layoff Bounce as eBay Cuts Staff

February 8, 2023

minute read

A drop in eBay shares was reported early on Wednesday after the e-commerce marketplace firm announced it would be cutting about 4% of its workforce as part of a restructuring effort.

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In a regulatory filing after the close of trading, eBay (ticker: EBAY) said it would cut about 500 jobs. In a statement, the company said the move was driven by the macroeconomic situation and its emphasis on a few select categories, which are growing faster than the rest of the company's business. In a message to employees, CEO Jamie Iannone said that the shift gave the company a greater opportunity to invest in high-potential areas such as new technologies, customer innovations, and key markets, as well as to continue to adapt and adapt to changing macro, e-commerce, and technology environments.

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In premarket trading on Wednesday, shares of eBay were down 0.7% from their previous close.

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It's interesting to note that the muted announcement comes in contrast to Zoom Video Communications ZM -4.23% (ZM), which closed up nearly 10% on Tuesday after it disclosed that it would lay off approximately 15% of its staff, or around 1,300 employees.

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Stocks in the technology sector have generally reacted positively to recent announcements of layoffs, with deeper cuts getting a more positive reaction than smaller ones. Wayfair W –0.11% (W) has seen its stock rise by over 40% since the company announced it would lay off about 10% of its global staff as part of its restructuring plan. Since Coinbase COIN -1.62% (COIN) announced that almost 20% of its employees would be laid off in the last month, the price of its stock has nearly doubled.

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In the wake of the Covid-19 pandemic, eBay has been hit hard by lower spending after a surge in activity during the pandemic. Trade Algo predicts that the company will report a drop in active buyers from around 147 million at the end of last year to about 133 million for the end of 2022 in its fourth-quarter report later this month, down from 147 million at the time last year.