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EBay out to stop slide after challenging quarter

EBay headquarters in San Jose, Calif.
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EBay headquarters in San Jose, Calif.

The recent rally in tech stocks has lacked one notable Internet name: eBay. Battered by a cyberattack, a slump in search traffic and the loss of its payments chief, shares of the Web retailer have dropped almost 6 percent in the past three months, a stretch that's seen Facebook, Amazon.com and Google each jump by at least 10 percent.

Hack attack at eBay

EBay investors will find out later Wednesday if the worst is behind them when the company reports second-quarter results. Analysts polled by Thompson Reuters believe revenue in the period increased 13 percent to $4.38 billion compared to a year ago, the slowest year-over-year growth since 2010. The deceleration is at least in part the result of Google changing its search algorithm, which pushed less traffic eBay's way. Gene Munster, an analyst at Piper Jaffray, recommends buying the stock following the dip.

"Over the past couple of months, investors have become increasingly bearish on eBay, due to the anticipated negative effect from the security breach and the change in Google's algorithm," Munster wrote in a report. "We believe that both these concerns are near term in nature as eBay marketplace seems to have bounced back."

Read MoreGoogle's algorithm change leaves small sites scrambling

Analysts expect eBay to report earnings of 68 cents per share, up 8 percent from 63 cents a year ago. That's also the slowest growth in about four years.

Business was looking up for eBay in April, after the San Jose, California-based company signed a truce with activist investor Carl Icahn that brought on a new board member but kept eBay from spinning off PayPal, as Icahn had urged.

The win was short-lived. In May eBay was forced to ask 145 million members to change their passwords after the company disclosed that the service had been hacked. The same month PayPal executive Rakesh "Rocky" Agrawal was fired after going on a Twitter rant, complaining about company employees, and in June PayPal President David Marcus left the company to join Facebook.

Read MorePayPal's Marcus joins Facebook

Colin Gillis, an analyst at BGC Partners, says the data breach will have the most lasting impact, because the push to get users to change their passwords will lead to "cart abandonment," or the failure to complete purchases. Still, Gillis has a buy rating on the stock and a $59 price target, which is 16 percent above Tuesday's closing price of $50.81.

The payments business remains eBay's growth driver, with analysts expecting 19 percent revenue expansion from a year ago to $1.94 billion. In September, PayPal acquired Braintree for $800 million, strengthening its position in mobile commerce, where it can now facilitate transactions for companies like Uber, Airbnb and HotelTonight.

By CNBC's Ari Levy

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