INVESTORS punished Ebay again yesterday after the world’s biggest internet auctioneer missed analysts’ estimates and raised doubts about its growth prospects, sending its shares plummeting 19 per cent.

In a further blow to the website, five analysts downgraded the stock. The plunge sent jitters through Wall Street, with the Nasdaq falling to its lowest level in nearly nine weeks.

During the last quarter of 2004 eBay’s profit, excluding special items, was worth 33 cents a share, compared with analyst expectations of 34 cents a share. However, the auction site still recorded a 44 per cent rise in profits to $205.4 million (£110 million) during the quarter, up from $142 million a year earlier.

Revenues for the quarter rose to $935.8 million from $648.4 million, boosted by growth at eBay’s PayPal payment service. For last year as a whole, eBay earned $778.2 million on sales of $3.27 billion.

Scott Kessler, an analyst at Standard & Poor’s, the ratings agency, said: “It’s the first time that I can remember that they haven’t at least met earnings expectations.”

EBay attributed its earnings shortfall to a slow start to the holiday season in the US and Germany, both key markets for the retailer.

The sharp fall in the share price indicated that investors believe eBay is no longer a safe haven in the internet and technology sector — despite the belief among Wall Street analysts that there are no obvious problems with the group’s business model.

The company plans to spend $300 million in key areas of investment and expanding around the globe, in particular on marketing its expansion in China, where it hopes to benefit from the rapidly expanding economy and surging consumer spending.

However, one analyst said: “Asia has been a challenge for the company over the past couple of years. In 2002 the company closed its doors in Japan, because Yahoo! got into the auctions market before it did.”

Five banks, including Deutsche Bank, downgraded the retailer’s shares. The share price tumbled $19.72 to $83.33 in New York yesterday. The shares are down by about 27 per cent this year.

EBay is hosting an analysts’ meeting next month at which it may offer more information on its slow sales. Analysts hope that the group will also make a new product announcement.

Meg Whitman, the president and chief executive of the company, described its performance last year as an “outstanding success” that generated “tremendous momentum” for this year. “I’m more confident than ever that the decisions and investments we’re making today will ensure a bright future for the company and our community of users around the world,” she said.

NOT SO VALUABLE

Meg Whitman, chief executive and director, lost $300 million.