The stock, which has dropped over 20% so far this year, is down 8% on the day to $10.54. One of the big reasons why the site has been struggling has been the lack of confidence among buyers stemming from rampart counterfeiting that has been taking place on the site.
In reaction to the counterfeit problems that eBay is dealing with, the company has been working with police to try to put an end to the problem. Earlier today, Bloomberg reported that eBay had worked in conjunction with German authorities that led to the seizure of over 20 tons of fake La Martina dress shirts, Ed Hardy tank tops and other brands.
Despite eBay's efforts, not everyone agrees that the company is doing everything within its power to ensure that good sold on its site are genuine, and the company has been sued by some pretty big names. Most recently, cosmetics giant L'Oreal joined the growing list of companies suing eBay for counterfeit products being sold on the site.
eBay does seem to be trying to do what it can to help keep consumer confidence up on its site. It spend $20 million annually on "trust and security", but as Jeffrey Lindsay of Sanford C. Bernstein & Co. points out, the site is "only as good as its worst seller". Unfortunately for eBay, the challenge of keeping counterfeit items off its site 100% may be impossible to ever accomplish.
While eBay buyers continue to worry about the authenticity of the items for sale on the site, more and more buyers will start looking for other avenues to buy their goods.
Until the company is able to rebuild some of its lost trust, it would be hard to justify jumping into this stock.