Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue July 10 2018 22:43:29

Wall Street Analyst Sounds Warning Bell on eBay

By: Ina Steiner

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At least one Wall Street analyst is concerned about the impact on eBay of the recent Supreme Court sales-tax ruling in which it overturned Quill, a precedent that protected remote sellers from having to collect and remit sales tax for customers in states where the sellers had no physical presence. (See our coverage here.)

SunTrust's Youssef Squali issued a report today sounding warning bells. CNBC summed up his concerns as follows:

"SunTrust Robinson Humphrey lowers its rating to hold from buy for eBay shares, predicting the additional tax compliance requirements will drive sellers away from the platform. The firm's analyst said new tax laws will force eBay to report sales transactions to the IRS."

While the Court overruled Quill's physical nexus requirement, the previous precedent still requires a "substantial nexus" in order for states to require sellers to collect their tax from their respective residents. But what constitutes substantial nexus has yet to be determined. 

Some believe the High Court indicated South Dakota's definition of nexus would pass the sniff test - its threshold is annual sales of $100,000 or 200 separate transactions. But others believe that's an unrealistically low bar. That uncertainty (and the ultimate burden of compliance once it's determined) could certainly scare off some percentage of sellers.

There's more - MarketWatch wrote

"Squali said he believes the U.S. Supreme Court ruling last month to reverse the 1992 precedent that states can require collection of sales tax without a physical presence increases the likelihood of a slowdown in gross merchandise value growth in 2019 and beyond. He said the new law reclassifies eBay as a "broker," which would require all sales to be reported to the IRS."

The reference to the IRS in these news stories is puzzling - we haven't read the analyst's report, but a few things worth mentioning:

- The IRS is concerned with Federal income tax, not state sales tax, and payment processors (including PayPal and credit card companies) are already required to report seller earnings to the IRS through Form 1099K. Sellers who meet the sales threshold have already had to provide PayPal and other payment processors with their social security number.

- Etsy and Amazon collect and remit sales tax on behalf of its sellers in at least two states (including Washington state) due to Marketplace Facilitators laws. This is something of which many small sellers approve, and once eBay becomes a payments intermediary, it may do the same.

We asked eBay about SunTrust's report, it has not yet responded. 

With eBay facing Wall Street analysts next week during its second-quarter earnings call, what questions would you ask eBay if you had the chance?

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Readers Comments

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: Silver Ice King This user has validated their user name.

Tue Jul 10 23:50:18 2018

I will have to give some thought to the questions I would have for Ebay, but as for the Sales Tax issue for Ebay, once they become the payment intermediary they ARE going to have to deal with it.  I do believe it is going to be the absolute final straw for Ebay and whatever their goals are as the need to learn and understand the Sales Tax laws is going to be a necessity and Ebay has already shown that the offshore programmers they use do not have these abilities .  They cannot even read and understand a calendar of US Holidays as they manage to screw up the 4th of July and Columbus Day almost every year !!!

But that Analyst just showed how little he understands what he is talking about in general  which might explain why Wall Street has not caught on to EBays smoke and Mirrors all these years.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

This user has validated their user name. by: FidoMaster
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Wed Jul 11 00:42:11 2018

''What questions would you ask if you had the chance?''

Naturally I'm hoping Gary Alexander and Dae Lee will be listening in, and I'm hoping someone will have the chops to ask the tough questions. So until $EBAY files their 10-Q here's where I'd start....

1) Why did Wenig mute the Q&A during the last investor call? WTF is he trying to hide?
 1a) Why did Daniel Tarman rudely blow off Ina's inquiry about the muted Q&A?
 2a) What participant on the call can fill in what transpired during the ''accidental'' muting?

2) Why were the circumstances surrounding RJ Pittmans (SVP & CPO) departure?
 2a) Was Pittman fired or did he resign (IE: did he get packaged out or not)?
 2b) Why did eBay try to hide Pittman's departure?

3) How many tens (or hundreds) of millions of dollars does each sitewide flash sales cost eBay (and the sellers)?
 3a) What is the item ASP during flash sale events?
 3b) What is the average shopping cart checkout value?
 3c) What is eBay going to do in the future to help smaller sellers get sales lift from higher-dollar sitewide sales promos?
 3d) What are the top-10 items sold during sitewide flash sales?

4) When is Thomas Tierney going to muster the board to replace Wenig with a competent CEO?

5) When is Wenig going to stop posing with his goofy-ass ''fish-gape'' fake surprised look for all his Hampton Magazine photo shoots?

6) Did Wenig really have himself cloned in China and name his own clone ''Scott Cutler'' and appoint his clone as SVP Americas?

That'll do for a start.  

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

This user has validated their user name. by: toolguy

Wed Jul 11 00:51:49 2018

Will eBay be taking fees once the payment is made or will we continue to have monthly bills?

I think eBay should take their cut ASAP so I don't get hit at the end of the month with a huge payment due. . .

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

This user has validated their user name. by: Marie

Wed Jul 11 01:58:07 2018

I think someone is really confused.  As Ina states IRS has nothing to do with the report gathering of state sales tax information.  The state sales numbers are reported to the various states Dept of Revenue.  But in their defense, this is a very confusing subject and one that we don't have a lot of guidance on just yet.  So I think there is a lot of What Ifs and guess work going on here.

We need more information and that isn't likely to happen anytime soon.  So like it or not, we need to wait.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: comments This user has validated their user name.

Wed Jul 11 03:00:29 2018

Ebay is going to have a lot to answer for in that call. I think Quill is a blessing for them because they are going to spin the sales slump off as a tax scare when in fact it is actually doubling down on failed policy that is causing the death of sales.

All the quarterly fee increases were good for keeping ebay's head above water. Fee cap was raised, PP merchant rates abolished, Ebay raised fees, Ebay changed model to punish big ticket items, Postal Service raised postage and this has massively devalues seller inventory The problem is that now that the majority of the diluted inventory has been sold off, it isn't being replaced. I know those increases caused me to take some losses and in other cases the inventory is no longer profitable enough to replace. Ebay has lost big bucks from me. Now it makes more sense to buy cheaper inventory where a fee % does not have a big effect <10 is not so bad on a $50 item but a $1000 item its hard to stay above water and I am just trying to survive. If I go under ebay loses $XX,XXXyr from me alone (and let me tell you that first X isn't a 1).

The only realistic way that sales tax would be collected would have to be by the payment processors. Otherwise payments will be as common as people volunteering their use tax. The IRS does not involve itself with local and state taxes that part of the story was rubbish. The Quill verdict was more a shot at huge businesses like Overstock, Newegg, and Wayfair that sell hundreds of millions of dollars worth of stock and have the ability to retain the services to pay those taxes. For now all we can do is wait. Making everyone pay tons more tax will not be popular politically so we are likely to get protection from our elected officials.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: Silver Ice King This user has validated their user name.

Wed Jul 11 05:09:04 2018

@Fidomaster

You should actually compare some of those 10Q's with the audited Financial Statements that come out after that.  I think you will see mostly the same numbers but a lot different commentary from the auditors vs the CEO and CFO in the 10Q.  What is really fun to check is the final numbers that come out vs the GMV that Ebay will report on the phone call as that varies so badly its not even funny since they do not have to account for returns at all.  When Ebay has to account for the increase in returns, especially as we keep gong forward with the disastrous Product Pages and Listings and the returns continue to increase due to EBay catalog errors the difference between the GMV and reality is no longer even close.  I really hope that EBay is forced to start netting the numbers so that Wall Street starts getting a truer number way ahead of the Audited Financials and so that the Shareholders also get a much cleaner number in time to react before the next quarter is almost completed.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: Frank Abagnale This user has validated their user name.

Wed Jul 11 07:20:59 2018

"SunTrust Robinson Humphrey lowers its rating to hold from buy for eBay shares".

I wouldn't get too excited about this firm's warning bells. The fact that they actually recommended a buy position on this stock, shows how clueless there were in the first place.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: Snapped This user has validated their user name.

Wed Jul 11 08:02:00 2018

So.  Tax implications.  That is the concern that should most fret potential shareholders.  Right.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: pace306 This user has validated their user name.

Wed Jul 11 08:37:04 2018

The issue here isnt the myriad of eBay stupidies/issues/crimes - its simply IF and HOW eBay will handle the new ruling.

eBay couldnt program an HP calculator properly - never mind the Adyen payments issue thats upcomming.

Its the overly complex tax issues.

What SHOULD happen is that it should be transparent to sellers. Buyers pay the amount of tax they are required to pay - its noted on the sale but the seller is by passed. eBay should then remit it to the states as needed.

But I think we ALL know that some how, eBay will dump it all on the seller - its how they do business. (Sometimes Im suprised eBay hasnt created a "lottery" that forces one random seller a week to cut the grass at Cukcakes house)(but Im sure thats comming! LOL).

If you recall, eBay pushed sellers to call Washington to convince them to undo the tax issue - its ONLY because eBay wants to be the SELLER OF RECORD - and of course shirk what ever responsibilities that come along with it - they just want the money.

Of course eBay is a HOLD for stock - its really SELL - but the lawyers in San Jose have alot of people hood winked .... one day they will learn - the emperor has no new clothes.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: Carol Is Here This user has validated their user name.

Wed Jul 11 09:31:52 2018

The Supreme Court made a decision based on the desires of mega corporations to destroy small and medium business.

Also for the legislators who like to get their hands on more tax money to hand out to their wealthy donor interests.

Buyers already already are balking at paying more for items thanks to escalating postage costs, etc. They will balk even more when taxes get added on to items they purchase from small sellers.

If small sellers don't pressure Congress to set higher bars for this taxation and provide exclusions for small business (and 200 transactions is nothing- not enough protection for the little guys) then kiss small business in the US goodbye.

Wall Street and its monopolistic drive loves that idea.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

This user has validated their user name. by: iheartjacksparrow

Wed Jul 11 10:14:10 2018

FidoMaster has a great list of questions. I would only add something along the lines of, why does it seem that virtually every day a new "glitch" appears on the site, and why does eBay seem unable or unwilling to stop these glitches from happening in the first place, and why aren't the glitches resolved in a more timely manner? (Knowing that some problems have been going on for years.) Also, when is eBay going to take some substantive action to remove buyers with a history of abusive returns and outright scams?

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: b86fiero This user has validated their user name.

Wed Jul 11 10:29:09 2018

IRS will be interested in sales tax collected and reported.  Sales tax collected on behalf of sellers could be considered a link to those who claim federal income tax - and those who don't on their eBay earnings.

The  IRS could collect millions (billions) more in income tax payments.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: Carol Is Here This user has validated their user name.

Wed Jul 11 10:41:15 2018

A lot of the problem can be found on Ebay's Board of Directors.

Thomas J Tierney has been there forever, very stale. He should have been gone a long time ago. He clearly is protecting Wenig and what Wenig represents.

He is also another egomaniac who promotes himself as a superior being lol.

Tierney is a Bain plunderer. That is what Bain does, plunders companies. It's just thieving called business.

Common thieves.

They also try to trick the public with their "social change" initiatives that are just cover for more plundering, unfortunately. The wealthy get wealthier off the backs of everyone else while they tell the "little people" it's good for the people at the bottom getting hit the hardest by the plundering.
lol But not really funny.

The Wall Street media just boosts them up and deceives for them.

It's a trap that the US is caught in.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

This user has validated their user name. by: Rexford

Wed Jul 11 12:05:56 2018

Of all that is ailing eBay, THIS is what he is concerned about?  Does he not understand that it is eBay who are driving sellers away with their ridiculous policies and constant "throw spaghetti at the wall" changes?  Their greed? Their unfairness? Their money grabbing.  And don't get me started on their "technology".  With business partners like eBay who needs enemies.

It just shows you how clueless so many Wall Street analysts are.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

This user has validated their user name. by: toolguy

Wed Jul 11 12:13:28 2018

@Rexford

Maybe Wall Street follows successful sellers like Bidadoo_Business

If I were an analyst from Wall Street and saw Bidadoo I would have eBay at a BUY with a $60 price target. . .

Now if Wall Street looked at my vw ID they would have eBay at a sell with a target of $5

But all know eBay's somewhere in between. . .

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: Silver Ice King This user has validated their user name.

Wed Jul 11 12:28:33 2018

I thought a bit about it and have one question to add to FidoMasters:

Why does Ebay find the need to constantly LIE about anything and everything? Why can't they just admit they have an issue and are working on it or just answer any question with  a straight answer and not all of the Ebay Weasel Speak?

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: pace306 This user has validated their user name.

Wed Jul 11 12:42:31 2018

You can contact him on Twitter: @firstadopter or by email: tae.kim1(at)nbcuni(dot)com.

thats the analysts contact info (its in the article) - we should all email him!

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

This user has validated their user name. by: Rexford

Wed Jul 11 17:24:20 2018

Toolguy, the Wall Street analyst didn't lower his rating on Bidadoo_Business, he lowered it on eBay.  eBay is not Bidadoo_Business.  eBay is a sum of its parts, Bidadoo_Business being a tiny spec in the grand scheme of things.  I am quite sure that the analyst couldn't give a flying fig about Bidadoo_Business, nor could I.   How well sellers do on eBay was not even a part of the equation.  If you go back and READ you will see that he based his decision on additional tax compliance requirements.  Period.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

by: pace306 This user has validated their user name.

Wed Jul 11 18:38:00 2018

"If I were an analyst from Wall Street and saw Bidadoo I would have eBay at a BUY with a $60 price target. . ."

................... if you read the analysis ... you would have seen that the MAX value they placed on the stock was $48 ...  LMAO stick to your day job.

Perminate Link for Wall Street Analyst Sounds Warning Bell on eBay   Wall Street Analyst Sounds Warning Bell on eBay

This user has validated their user name. by: toolguy

Wed Jul 11 19:29:41 2018

@pace306

My day job for the past 18 years has been: eBay seller

This analyst has his up his rear if he thinks the tax issue will affect eBay's stock price. . .

With that thinking he might as well downgrade every company that sells on the internet. . .

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