Citigroup downgraded Internet auction giant eBay (EBAY) to sell from neutral.
Analyst Lanny Baker says he's concerned about eBay Motors, the company's largest auction category. He notes the motors group has propelled 35% to 40% of growth in eBay's gross merchandise sales in the last two years, and now accounts for 28% of gross merchandise sales.
A survey of 150 used car dealers suggests that while 30% of used-car dealers in the U.S. are using eBay Motors, about 40% found eBay's prices and auction format to be a drawback. In particular, Baker says the motors' group pricing model is problematic; he's skeptical of its ability to raise prices without broader pricing model changes. Baker sees a downside risk to $48.