Core Firm, Stores Weak; Shares Remain Materially Undervalued
• Our QTD core (i.e. excluding Stores) listings count is up 24% Y/Y – this represents an acceleration from the 22% rate that eBay posted in 2Q06.
• Our QTD Stores global listings count is up 88% Y/Y – this represents a deceleration from the 178% rate that eBay posted in 2Q06.
• We estimate full-quarter listings of 603MM (up 32% Y/Y), which is roughly 1% lower than our published estimate of 608MM (up 33% Y/Y).
• Our QTD count indicates a 84% core, 16% Store listings mix – this is an improvement from last quarter’s 82% core, 18% Store mix and suggests that 2Q06 may have been the trough quarter in terms of listings monetization.
• On a smoothed, rolling-13-week basis, we see core global listings growing at 45% Y/Y, core U.S. listings growing at 32%, and core International listings growing at 57%.
• QTD, we are tracking Y/Y listings growth acceleration in the U.S., Germany, Taiwan, France, Italy, Korea, Spain, Hong Kong and New Zealand.
• QTD, we are tracking Y/Y listings growth deceleration in the U.K., Australia, Canada, China, the Netherlands, Belgium, Austria, India, Singapore, Switzerland, Sweden and Ireland.
• EBAY shares remain materially undervalued relative to our $38 target valuation. $38 is 23x our 2008 pro forma EPS estimate of $1.70 and 13x our 2008 EBITDA per share estimate of $2.60.
• We maintain our 2*/Above Average rating on EBAY shares.
EBAY 1-yr chart: