eBay is aware of the fact that it needs to get its company together and make an effort to accelerate the growth.
eBay Inc.'s stock had been quite steady during January until it reported its fourth quarter earnings for fiscal year 2015 on January 27, 2016. Investors were certainly not happy about what the organization had to say.
During the beginning of the first month of the New Year, the eBay's stock was traded at $27.11 while after the results for fourth quarter were announced, it closed at $22.40 on January 28, 2016. There was a significant drop in the stock price right after the company disclosed the financials.
Furthermore, the month ended with a share price of $23.46, which indicated a drop of 13.46% as per the calculation of S&P Capital IQ data. It is safe to say that it has witnessed a rough start to the year but it is yet to see how the business will perform in the upcoming quarters.
In its earnings report, eBay stated that there was 5% year-over-year growth in its active buyers, which increased to over 162 million. A total one-year decline was seen in the revenue generation of approximately 2% on year-over-year basis that amounted to $8.6 billion.
The reason for the drop in the company's stock after the announcement of the earnings was that it reported weak/bleak guidance for the upcoming quarter, which would be the first quarter of fiscal year 2016. According to the expectations of the retailer, the earnings per share could amount to $0.43 to $0.45 while the popular consensus amongst analysts is $0.48. While for the entire year, eBay is expecting to report EPS of $1.82 to $187, whereas according to the analysts' estimations, it could be around $1.98.
Presently, the challenge faced by the e-commerce corporation is that ever since its separation with PayPal, many have wondered how its marketplace performs. However during the quarter, the marketplace had a hefty amount of $20.7 billion in sales while in revenue it managed to make as much as $1.9 billion.
According an ITG analyst at Bloomberg, Steven Weinstein, eBay has lost its identify after splitting up with PayPal - he added that the company's pricing, service or even its competitiveness is not better. He believes that it still has certain platforms in which it can grow and provide its own touch because currently there is no magic in auctioning stuff.
eBay already knows that it has problems in terms of growth and is currently in a period of transition. To eliminate those growth problems in its core marketplace, it is especially building up StubHub and furthermore, it is working on increasing its sources of revenue. In its earnings report, it managed focused on a number of initiatives, which include structuring data into catalog, augmenting the customer experience and managing and exploring other traffic sources. It is also working on trimming down the asset portfolio.
According to Forbes, these initiatives could the company's growth and increase demand in the long run but in the short run, the business will continue to underperform in the marketplace.