eBay is once again in the crosshairs of an activist investor, this time Elliott Management, which said it “beneficially owns” over 4% of eBay, making it one of the company’s largest investors.
The last time an activist investor took aim at eBay (Carl Icahn), it resulted in capitulation, with then eBay CEO John Donahoe and the board of directors breaking up the company and leaving it much smaller and weaker. eBay is still feeling the impact of the attack as it attempts to roll out its own payment processing system now that PayPal is a separate company.
Elliott Management sent a letter to the eBay board, explaining the purpose of its message as follows:
“The purpose of this letter is to share our perspectives as a large shareholder and provide our specific thoughts on how eBay can become a better and more valuable company. Elliott believes that by taking steps to unlock strategic value, refocus on the core Marketplace and improve execution – a plan we call “Enhancing eBay” – the Company will grow faster and deliver meaningful operational improvements. As a more focused and efficiently run business, we believe eBay can achieve a value of $55 to $63+ per share by the end of 2020, representing upside of more than 75% to 100% within the next two years.”
It created a website at EnhancingeBay.com where you can find the full letter. It includes a section called “Revitalizing Marketplace” where it wrote, “underperformance has been driven by a series of self-inflicted execution missteps (discussed further below) and a lack of strategic focus on the core business.”
Of particular interest to readers, Elliott Management called out the technical glitches that plagued eBay’s platform in 2018:
“In 2018, eBay sellers complained about countless technical issues including incorrect billing, lost photos, warped titles and many others. On this month’s end of year podcast, eBay senior management apologized to sellers and admitted, “This is a 2018 that we don’t want to repeat on a number of levels. And the technology issues that we have had with the platform is top of the list.” We agree: The consistent reliability of the platform is central to eBay’s success, and management must do all that it takes to achieve it.”
The letter also characterized eBay as being distracted and having a lack of focus with regards to Mergers & Acquisitions and in other areas. “eBay’s major initiatives have also changed repeatedly over time, with strategic priorities evolving from big brands and retailers to structured data and now to payments and advertising.”
As if the critique didn’t already call into question current CEO Devin Wenig’s performance, Elliott Management added in its letter, “In addition to the issues raised above, the Company’s leadership team has suffered an alarming degree of turnover recently. eBay needs stable and experienced leadership to implement the Enhancing eBay Plan.”
eBay issued the following statement in response:
“The eBay Board and leadership team regularly engage with our shareholders and value their input. We are focused on delivering value for our shareholders, customers and employees by driving the best choice, the most relevance and the most powerful selling platform to deliver growth. Accordingly, we appreciate Elliott’s recognition of the strength and power of eBay’s business and will carefully review and evaluate Elliott’s proposals. We look forward to the opportunity to engage with Elliott, as we do with all shareholders.”
Former top eBay executive Dana Stalder, now a partner at a venture capital firm Matrix Partner, tweeted of the news: “Sad, but not unexpected, eBay has become the next AOL > Yahoo! of tech giants.” That has to sting – it’s unprecedented for former eBay executives to speak negatively of the company.
eBay is set to release fourth-quarter and full-year 2018 earnings in one week, January 29, 2019.
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