Sell on the News: eBay Shares Slide Today

Last night, eBay delivered the quarter many bulls had hoped to see, with better than expected revenues and profits. But the stock is sliding today, as the Street pokes holes in the numbers. The stock had rallied 25% over the last month heading into last night’s report, so what we’re seeing today at least in part involves some profit-taking. But it also reflects a nearly unanimous view on the Street that the company still has to find a way to re-energize growth in its core Marketplaces business.

Whether bullish or bearish, the song the analysts are singing this morning is the same: Nice quarter, but the company has a long way to go to revitalizing growth.

Here’s a sampler of some of this morning’s comments from the Street:

• Tim Boyd, American Technology Research: He downgraded the stock to Neutral from Buy. Boyd’s view: upside in the stock is limited until the company can re-accelerate growth in active users and gross merchandise value. He also notes that the company faces “both macro-economic headwinds and the prospect of continued market share losses to other e-commerce channels.”
• Douglas Anmuth, Lehman: With eBay likely having already captured the low-hanging fruit in both platform impact and share-price, we believe shares will be somewhat range-bound in the near term.” Maintains Equal Weight rating; target to $33, from $30.
• Benjamin Schachter, UBS: “We’re incrementally more positive on management’s priorities for reinvigorating core growth, but we’d like to see sustained evidence of improvement,” he writes. He maintains a Neutral rating rating and $29 target.
• David Joseph, Morgan Stanley: Maintains Overweight rating, but concedes that “bears may still point to a lack of improving demand,” with 1% year-over-year growth in active users, and cautious comments on the economy.
• Brian Pitz and Brian Fitzgerald, Bank of America: Maintains Buy rating, but contends that “eBay may have to eliminate a source of revenue from listings fees longer-term, especially given increasing competition from AMZN and Craig’s List.” They says that further M&A activity “could also be a negative catalyst for share longer term.”
• Jeffrey Lindsay, Bernstein Research: Lindsay maintains his Outperform rating. But he notes that the strong Q1 “was patched together out of better than expected performances at PayPal, Skype, StubHub, Classified and Advertising supported by a favorable exchange rate, cross border trade and low taxes.” But he adds that: “still, a win’s a win, and the reward is time for the new CEO to fix the core business.” Still to be solved: stagnating active user growth, flat listings and slowing gross merchandise value.
• Scott Devitt, Stifel Nicolaus: “eBay shares remain statistically inexpensive yet the company continues to face longer-term challenges.” He advises buying the stock on pullbacks.
• Stephen Ju, RBC Capital: “What remains to be sen is whether or not the company can drive meaningful growth,” he writes. Ju maintains a Sector Perform rating on the stock.

There are more, but you get the idea: the Street is simply not convinced that the company’s core business is growing right now. Ergo, eBay today is off $1.38, or 4.3%, at $30.74.

Comments

[JohnPseudonym]

Ebay is trying to become Amazon, Amazon already exists.

A large chunk of ebays profits comes from the fencing of stolen and counterfeit goods.

They be sued out of existence if they keep ignoring that and their profit will plummet if they really get serious about stopping the fraud.

The Tiffany case will be a disaster for eBay.


www.cbsnews.com/storie...

eBay sale leads to stolen goods arrest
www.usauction.info/200.../

[Marty]

I am an Ebay seller, generally supportive of the company but I believe in the last few years they have lost their way trying to become and Amazon clone. First some stats taken from Ebays Quarterly reports. The percentage of registered users staying active is dropping fast.

In 2006 , when I felt Ebay was firing on all cylinders when stores were in core user growth was humming etc.

1st Quarter 2006

193 million registered users of which 75.4 million or (40%) were active

Two years later ...1st Quarter 2008

309 million registered users of which 83.9 million were active (27%)

First of all note that 116 million registered users were added but Active registered users only went up about 8 million. Those numbers show an incredibly high churn rate.

In the last few weeks Ebay removed the Ebay Wiki which was built by its members (with no notice) , banned Digital delivery of items like Ebooks, templates, etc), announced they are closing down Live Auctions on the site in 8 months or so and keep moving to a homogenized look which is leaving the community befuddled (at best).

At a time when the US dollar is low in relation to foreign currencies the countries users with stronger currencies cannot see US items unless they change their settings on Ebay.

People came to Ebay to sell things in the new world of the internet. It was exciting, it brought a sense of connection and community. First collectibles but then a market for other items developed. As Ebay expanded worldwide more opportunity seemed to be there.

Right now, Ebays mistakes over the last few years are masked by huge foreign currency exchange differences that are making the 50% of its income derived from foreign countries appear much larger and it is not reflective of strong growth in those markets.

Flat earnings in EUROS for example increased 30% in US dollars over 2 years.

When EBay raised fees in the fall of 2006, it lost millions of items and thousands of sellers. Many went to Amazon and other sites. They saw some success and told other people.

Just as Ebay was formed it can unwind. This is my worry.

It is my opinion that on the current track , Ebay will totally lose its ability to turn this around as user growth continues to be strained.

You cannot have those levels of turnover and succeed. This is exactly what brought down AOL when even MSN couldnt catch it back in the days of online services.

I sell on Ebay, and think that led in the right direction, they could re-invent the glory of what they were. My advice would be ...

1- Stop trying to stamp out the diversity

2- Open up the Intl markets to cross border trading instead of protecting them

3- Buy the remaining 80% of Mercado Libre , the south American Ebay and open up those markets .

4- Let all the people connect, and focus on the connection of the world that is found on Ebay through products, ideas, services etc.

5- Integrate all this with their World of Good and Givingworks programs already active in doing good things world-wide.

6- Use IBMS "MAstor" voice translation program to develop international trading on a new level.

7- Develop the Local Markets as they did in 1999-2000 when they were too early (as broadband growth was minimal then). Ebay Local, announced in 2007 was supposed to be coming but then again it might have been canned. With shipping costs an issue lately , local delivery options and just in time buying could be a whole new market.

I love the company, hate the direction. I dont pretend to have all the answers or always be right but I can say I have a good feel for those around me (fellow sellers) and this is not the correct path to grow the site.

Marty

[Lisa]

Really interesting info -- thanks for sharing.


On Apr 18 08:32 AM Marty wrote:

> I am an Ebay seller, generally supportive of the company but I believe
> in the last few years they have lost their way trying to become and
> Amazon clone. First some stats taken from Ebays Quarterly reports.
> The percentage of registered users staying active is dropping fast.
>
>
> In 2006 , when I felt Ebay was firing on all cylinders when stores
> were in core user growth was humming etc.
>
> 1st Quarter 2006
>
> 193 million registered users of which 75.4 million or (40%) were
> active
>
> Two years later ...1st Quarter 2008
>
> 309 million registered users of which 83.9 million were active (27%)
>
>
> First of all note that 116 million registered users were added but
> Active registered users only went up about 8 million. Those numbers
> show an incredibly high churn rate.
>
> In the last few weeks Ebay removed the Ebay Wiki which was built
> by its members (with no notice) , banned Digital delivery of items
> like Ebooks, templates, etc), announced they are closing down Live
> Auctions on the site in 8 months or so and keep moving to a homogenized
> look which is leaving the community befuddled (at best).
>
> At a time when the US dollar is low in relation to foreign currencies
> the countries users with stronger currencies cannot see US items
> unless they change their settings on Ebay.
>
> People came to Ebay to sell things in the new world of the internet.
> It was exciting, it brought a sense of connection and community.
> First collectibles but then a market for other items developed. As
> Ebay expanded worldwide more opportunity seemed to be there.
>
> Right now, Ebays mistakes over the last few years are masked by huge
> foreign currency exchange differences that are making the 50% of
> its income derived from foreign countries appear much larger and
> it is not reflective of strong growth in those markets.
>
> Flat earnings in EUROS for example increased 30% in US dollars over
> 2 years.
>
> When EBay raised fees in the fall of 2006, it lost millions of items
> and thousands of sellers. Many went to Amazon and other sites. They
> saw some success and told other people.
>
> Just as Ebay was formed it can unwind. This is my worry.
>
> It is my opinion that on the current track , Ebay will totally lose
> its ability to turn this around as user growth continues to be strained.
>
>
> You cannot have those levels of turnover and succeed. This is exactly
> what brought down AOL when even MSN couldnt catch it back in the
> days of online services.
>
> I sell on Ebay, and think that led in the right direction, they could
> re-invent the glory of what they were. My advice would be ... <br/>
>
> 1- Stop trying to stamp out the diversity
>
> 2- Open up the Intl markets to cross border trading instead of protecting
> them
>
> 3- Buy the remaining 80% of Mercado Libre , the south American Ebay
> and open up those markets .
>
> 4- Let all the people connect, and focus on the connection of the
> world that is found on Ebay through products, ideas, services etc.
>
>
> 5- Integrate all this with their World of Good and Givingworks programs
> already active in doing good things world-wide.
>
> 6- Use IBMS "MAstor" voice translation program to develop international
> trading on a new level.
>
> 7- Develop the Local Markets as they did in 1999-2000 when they
> were too early (as broadband growth was minimal then). Ebay Local,
> announced in 2007 was supposed to be coming but then again it might
> have been canned. With shipping costs an issue lately , local delivery
> options and just in time buying could be a whole new market.
>
> I love the company, hate the direction. I dont pretend to have all
> the answers or always be right but I can say I have a good feel for
> those around me (fellow sellers) and this is not the correct path
> to grow the site.
>
> Marty
>