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It's funny how deadlines are sometimes so disconnected from what's really going on. Yes, eBay Inc. (NASDAQ: EBAY), the online auctioneer, beat analyst estimates coming in with earnings of 43 cents per share, compared to expectations of 41 cents. Yes, its earnings growth was a not-too-shabby 22%. And yes, PayPal remained its bright spot, with a 33% revenue growth. But eBay shares are trading down 7% in after-hours due to a soft outlook.Is it just the soft outlook though? Most companies give a lower guidance these days as the weakening U.S. economy is hurting business. I'm sure some of eBay's softer outlook could indeed be attributed to the weakening economic conditions, but once they start digging deeper into the metrics, many on the Street aren't happy. For example, the 20% revenue growth -- or more specifically, the 13% revenue growth at eBay's Marketplace -- doesn't reflect the actual business very well, as advertising and increasing take rates have been contributing more and more. In fact, Silicone Alley Insider has no problem proclaiming that eBay growth is grinding to a halt, saying that "Transaction revenues grew just 9% year-over-year, vs. 14% y/y growth last quarter and 23% y/y growth during Q2 2007."
Then we have gross merchandise volume, or GMV, where analysts had been expecting a 12% growth. Not only did eBay post only an 8% year-over-year growth, but it posted a 2% decline sequentially. Another disappointment was the new listings numbers, which totaled 666.9 million, up 19% year-over-year and 3% sequentially.
Marketplace -- that's where the problems lie, and that's where investors would like to see improvements most; Skype and PayPal are growing well. Thing is, Marketplace isn't such a market place anymore. I'm not even sure how eBay can fix that. The internet and its users have evolved and I don't know that eBay fits the bill anymore. Just like Yahoo!, eBay is a mature company in the lifespan of the internet, and both have their glory days behind them. I wouldn't touch eBay stock as I don't see it going anywhere with its current business model.
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Reader Comments (Page 1 of 1)
7-16-2008 @ 7:23PM
Preypal Problems said...
Ebay's marketplace is crumbling because sellers are leaving in droves. The new fee hikes, the fact the sellers can no longer leave negative or neutral feedback, even for buyers who don't pay. But, the buyer who doesn't pay, can still give negative to the seller. This is a competitors dream, where they can easily ruin the competition.
Then you have the new "Best Match" search, which is lowering sellers listings to far back pages, even though they are still paying the same amount as others to list. Best match is putting the sellers with free shipping, higher up in the search because it is better for ebays bottom dollar. If the seller is giving free shipping, it is more than likely adding it to the purchase price, meaning ebay is even making profit on shipping. It's all about the money!
Ebay tells buyers that a 4 DSR rating is good, but it penalizes sellers for the same rating. This is all set up so that ebay doesn't have to pay the discounts to these sellers.
It has just gotten out of hand and you can go to ebays own message board and see how sellers are getting ripped off left and right and they are closing up shop, due to the new changes. It is just too dangerous to sell on ebay, right now.
Have a look:
http://tinyurl.com/23tdq7
7-16-2008 @ 9:31PM
armrob1 said...
agreed with all your points. but one aspect that's even worse is that ebay is actually pushing away casual sellers who sells things auction style, in favor of big sellers who have thousands of items listed and sell at a fixed price, thus making more money for ebay.
the buyer and seller protection through paypal is absolutely horrible.
7-16-2008 @ 10:28PM
GARY JONES said...
IT'S A LOT SIMPLER TO BUY NEW STUFF THAN TO
PUT UP WITH THE SHIT
7-17-2008 @ 5:57AM
tim said...
The fee decrease was Awesome.
I also love the new hybrid buyers who are all 100% perfect in each & every transaction no matter what. Fantastic.
And finally, I'm still most impressed by your customer service hotline which is still second to none. They handle problems so fast, it's almost like they don't even exist.
Great work Ebay. Keep up the good work. I'm sure your stock will be going through the roof.
Unfortunately, I won't be reaping the benefits of your future price gains since I sold my 1200 shares many months ago.
You guys really have a clear, concise & focused plan for future growth: Drive off all of the small sellers that made ebay what it use to be > FUN & PROFITABLE.
7-17-2008 @ 7:36AM
Kate said...
eBay is a the pits to deal with. PayPal is worse. The fact they took away the sellers ability to respond to a buyers negative rating is utter stupidity! They want buyers to come back to eBay and spend money, but what will eBay sell if they abuse their sellers and the sellers pack up their wares and move on? Nothing. We ran an eBay store for years, but now we just add a few listings here and there. eBay's fees are outrageous and there is no protection for sellers or buyers. It's all a load of crap. eBay only cares about their bottom dollar. Even though I sell on eBay, I never buy on eBay. It's far easier to buy product at conventional online stores and you have better pricing, better service and you receive your products faster. eBay is time dated.
7-17-2008 @ 11:14AM
Yar said...
Yes I relish the day feebay goes under. They are a bigger rip-off then the government. Scampal is a joke as well. When you pay through Scampal did you know that they take a percentage of your shipping and handling when they charge their fee????