American Technology Research analyst Mark Mahaney came away from eBay's analyst day incrementally more impressed, but unwilling to change his "Hold" rating. He writes:
Quick comment: Call for clients with eBay Power Sellers? That's real research.
eBay presented a broad and detailed review of its businesses -- U.S. transactions, international transactions, and PayPal. For each business, eBay reviewed current metrics, described the distinct value proposition, quantified the market opportunity, and presented the company's strategy for exploiting that opportunity.
We maintain our Hold rating, but at the margin we came out more positive. The company addressed the key issues stemming from the December quarter. Not all answers were convincing, but the effort was made. There were also some positive new data points.
Among the key takeaways: 1) eBay was unwilling to commit to 20%+ revenue growth in the U.S. but did express confidence in outgrowing the overall ecommerce market; 2) eBay is fully committed to China ("doubling down") and has seen a very strong January (40%ish Q/Q GMV growth); 3) eBay is responding to recent Power Seller concerns by providing several new enhanced services and greater customer support; 4) Although seeing "Bubble-like" search pricing, eBay plans on keeping marketing expenses in a 20%ish band of revenue; and 5) eBay reaffirmed its 2005 guidance, although it lowered its capex outlook.
Near-term, we are concerned about 1) soft QTD listings, 2) an opex outlook that may be "lumpier" than expected, and 3) investments that may take several quarters to be proven out.
We are hosting a call for clients on Monday (2/14) with eBay Power Sellers.