Analysts: eBay's Current Quarter Tracking Well

We have two firms out with positive comments on eBay (EBAY) saying the current quarter is tracking well:

- Citigroup says that to date they have tracked 574MM Total Core listings consisting of 196MM U.S. listings and 378MM international listings. Combined with the estimated 89MM store listings we have tracked QTD, they estimate total listings growth improved to +13% Y/Y, tracking ahead of Citi's 1Q08 growth estimate of 11% Y/Y.

- Jefferies notes eBay's February pricing tweaks are having positive effects on 1Q results, with 1Q listings pointing to a healthy 9% Y/Y growth and translating into results likely at the higher-end of expectations. With the stock's pullback, EBAY is the cheapest among large cap internet plays, providing an attractive risk/reward profile.

Based on their weekly tracking of eBay listings worldwide, they're estimating 630-650M listings for 1Q08 vs. our original projection of 602M (up 9% Y/Y at the mid-point). All else remaining constant, this should result in upside to revenue, EBITDA and PEPS of $81M, $31M and $0.02 for 1Q. Jeff co. is raising their estimates to $2.11B, $780.5M and $0.39, respectively. Consensus estimates stand at revenues of $2.05B and PFEPS of $0.39. They are also raising FY08 revenue and PEPS estimates to $8.78B and $1.67 vs. consensus estimates of $8.70B and $1.65.

Reiterate buy rating and $40 target.

Notablecalls: This is certainly good news. With the dollar down vs. the euro since management guidance, there's some upside in store from there as well.

Comments

[Dinah Balk:]

It's unfortunate that Citigroup & Jefferies forgot one factor in their reports - the number of listings reported aren't real. Ebay added an unknown number of eBay Express & shopping.com listings to their site and these appeared as listings.

Another factor they should consider is that although eBay states sell through rates are higher, profit margin for sellers has actually shrunk dramatically due to Donahoe's "buyer experience" plan causing many sellers to leave or go on strike for the entire month of May.

2008 Mar 26 11:34 AM

[deecee:]

Is that why ebay is offering $.01 listings until the 31st? Business must be good. :)

2008 Mar 26 12:40 PM

[LBC:]

the test listings issue is a well known issue on wall street. ebay is going to beat Q1 estimates handily, regardless of how much the sellers whine.

2008 Mar 26 12:52 PM

[Tony P.:]

That's funny... JPMorgan has the week 12 at 627.5 million listings, but does have the same 13% y/y growth. see here:

seekingalpha.com/artic...

Hey, it's only a difference of 53 million and that's a measly 10%. Yep, only 10% - give or take. No biggie.

As I posted on that aforementioned blog: The listing numbers are up because of Double Dipping. The UK and AU items appear on the USA site by default. Those items, and their respective totals, also appear on each *individual* sites' category tally numbers.

The Street may know about the 'test listings', but do they know about the above scenario AND the ShoppingDOTcom items within Ebay Express? At last count, those Shopping/EE items amassed something like 4 Million, of the 14 Million showing as listed on the USA site.

An aside: those Shopping/EE sellers have some of the Worse seller performance records, EVER! Of course, ebay is allowing them onto the site and turning a blind eye towards the sellers' ratings. Those ratings - some running at 12% buyer displeasure - would have regular ebay sellers suspended. Regular sellers get Da Boot at 5%.

2008 Mar 26 02:44 PM

[2braincells:]

I think you will notice that the "whiners", as you are wont to call them, have fairly much quieted down. I would think that indicates that they have moved on. The rise in reach and rank for competing sites would lend further credence to this summation... add that to the continual decline of traffic rank for "e" and I wouldn't be too bullish right now. I am counting the days, don't want to wish my life away, but I think somebody's got a commuppance due... it's going to be like Christmas morning and I'm a kid again... Yes, Virginia, there is a Santa Claus. Score ONE for UnderDog !!

2008 Mar 26 02:49 PM

[Socialism c...:]

Let's not forget the PayPal contribution either - it has been faster growing than the auction earnings, so even though it is a fraction of the overall business, the overseas growth from that is going to be multiplicative and with currency conversion will be a very, very nice additive to the bottom line, IMO. Disclosure: I do own EBAY.

2008 Mar 26 06:35 PM

[Marty:]

Insertion fees for listings have fallen 50% for most listings , even more for media listing. Listing totals SHOULD be up given this decrease and the recent 1 cent listing sales for the last week of March. I think listing numbers are anemic considering the degree to which the fees to insert listings have declined. Look at the Medved statistics for 2007 and 2008 . You will find the 2007 Jan low in listings was 800k higher than the 2008 low, you will also find a mean level of listings in the 14 million range over the first few months of 2007 , and a higher "high" point of 19 million listings in 2007 vs 2008s first quarter high of 16 million or so and a settling in range of about 13 million.

That said Ebay knows how to make their numbers what they need. I am not as concerned with listing numbers as I am with the direction the site is going and the response within the community.

The stock is due for a bounce, I mean they have been in the middle of a 4 billion plus stock buyback as the stock had declined 40% or so. It is a good company, but I would like to see better advertising, a sign of a partnership with its users to bring the company forward and less tension.

While Ebay has focused on feedback and detailed seller ratings changes and moved fees up then down , it hasnt brought anything new and exciting forward, has disappointed with its media campaigns and has unnecessarily angered many in its user base.

I am hopeful this period will be put behind it, and things will return to the good times of the past.

Marty

2008 Mar 27 10:14 AM