eBay lowers forecasts for crucial fourth quarter

eBay has blamed the weaker US economy for its decision to lower forecasts for the fourth quarter.

The e-commerce giant reported a higher third-quarter profit on Wednesday as consumers made greater use of its PayPal service.

However, the shares plunged by more than 4pc in after-hours trading after the company said the macroeconomic environment in the United States was weaker, leading it to give a cautious outlook for the current quarter, which includes the crucial holiday season.

eBay said the environment in Europe and Asia was mostly stable.

"US e-commerce softened considerably and we have a cautious outlook for the holiday season," Chief Financial Officer Bob Swan told investors on a conference call.

Data firm ShopperTrak has forecast the slowest holiday sales growth since 2009, and last week, September retail sales showed U.S. shoppers were cautious, following a disappointing second quarter for many retailers.

eBay expects revenue of between $4.5 billion and $4.6 billion for the current quarter, ending Dec. 31, compared with the $4.64 billion estimated by analysts, according to Reuters.

"You could certainly point to consumer confidence that took a beating," said Colin Gillis, a technology analyst with BGC Partners.

US consumer confidence slid last month to its lowest since May, according to a report released in late September by the Conference Board, an industry group.

eBay's Net income for the third quarter was $689 million, or 53 cents a share, up from $597 million, or 45 cents a share, a year earlier.

For the holiday quarter, eBay expects a profit of 79 cents to 81 cents a share, while Wall Street analysts estimate 83 cents. Revenue rose 14.3pc to $3.89bn.

PayPal, eBay's online payments division, reported that total payments volume rose 24.7pc to $43.8bn.

Edited by Szu Ping Chan for telegraph.co.uk