Why is eBay dead
eBay: The dead live longer
For a long time, investors avoided the share of the online portal Ebay. But since some well-known hedge funds have positioned themselves with the group and pushed for structural changes, the situation has changed significantly. In addition, the internet retailer turns out to be a beneficiary of the Corona crisis. The platform’s business is going much better than originally expected and the corporate management has just upgraded its outlook for the year.
The result can already be read off in the share price. According to the numbers, Ebay papers shot up 6%. Since the turn of the year, the increase in value has now totaled an impressive 35%.
Ebay - the pioneer of online auction
Before I go into the current figures, I would like to provide you with a few background information on eBay: eBay is a US company that operates one of the largest online marketplaces. It was founded on September 3, 1995 by Pierre Omidyar in San José (California) under the name AuctionWeb. The company also offers its services in Europe, for example in Germany, Switzerland and Austria. The PayPal payment service was also part of the company until July 17, 2015.
Over the years, the range has expanded from a consumer-to-consumer marketplace with a flea market-like character to a business-to-consumer platform, which means that new goods are offered by commercial dealers, as opposed to second-hand goods from private suppliers.
With other platforms such as Half.com, Fashion and mobile.de, the company has established itself in specific industries with vertical shopping sites. In addition, eBay offers tailor-made e-commerce solutions for other companies.
Number of buyers constant
In the first quarter, Ebay shows 174 million active customers in its quarterly report. These are customers who have made a purchase via the platform at least once in the previous 12 months. Incidentally, the number is astonishingly constant and has now remained at the same level for 3 quarters in a row. Total sales of $ 2.37 billion went through the books (-2% year-on-year quarter). The bottom line was that Ebay made a profit of $ 586 million, roughly on par with the previous year ($ 590 million).
Management screws up the outlook
More customers, more dealers, more trading volume - the Corona crisis gives the online marketplace Ebay a good second quarter. All important product segments, including home and garden, electronics, fashion, auto parts and collectibles, benefit from the corona boom.
The number of dealers in the marketplace is also increasing. Since March, tens of thousands of mostly small dealers have created Ebay accounts in order to open up a new sales market during the shutdown.
The corporate management is correspondingly optimistic and has just raised the outlook. The group now expects sales between $ 2.75 and $ 2.80 billion in the second quarter of the year. For you to compare: Previously, the group had sales between 2.38 and 2.48 billion dollars.
This would bring the group to a year-on-year growth of 13 to 16%. The online auction house now expects earnings per share to be $ 1.02 to $ 1.06 per share. That is significantly more than $ 0.73 to $ 0.80, which has been targeted so far and represents an increase from 54% to 60% over the previous year.
For the year as a whole, Ebay is assuming that sales will probably be above the range of $ 9.56 to $ 9.76 billion forecast at the end of April.
Selling eBay classifieds targeted
In addition to an increased outlook, structural changes could also be pending at the group in the near future. Apparently, the segment around eBay classifieds is for sale and, according to insiders, could flush 8 to 12 billion dollars into the coffers. The division also includes the car platform Mobile.de, which the US hedge fund Elliot has been pushing for sale for a long time.
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