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Sun Apr 29 2018 09:39:14

Wall Street Starts Seeing through eBay Smoke and Mirrors

By: Reader

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Dear Ina,
It appears as though at least one Wall Street analyst is beginning to see past the smoke and mirrors of eBay CEO's Devin Wenig. (Link to SeekingAlpha.com article.) This analyst is now seeing eBay in much the same way many small sellers have been seeing eBay over the past few years.

Key observations:

* The company's latest Q1 results reveal a platform that's struggling to be relevant to users and poor forward-looking guidance that indicates management's uncertainty about the future.

* It costs nothing to use eBay as a buyer, yet eBay's active buyer pool absolutely pales in comparison to Amazon. There is no better indication that eBay's platform no longer jives with the modern consumer.

*... for a company that's posting low single-digit growth, contracting profit margins, and has little hope of being relevant in five years, eBay is more of a value trap.

* eBay still relies heavily on its core Marketplace business to drive results, but looking at the low user growth and just 1% growth in sold items, it doesn't seem the product is capable of appealing to today's buyers.

* eBay's widespread reputation for charging high seller fees also has alienated a large part of the supply side of eBay's marketplace.

* eBay is attempting to leverage AI technologies to improve the marketplace search functions on the site, but it's unclear whether this alone can bring back a swath of users.

* Acquisitions and buybacks can only help the optics for so long - the company does heavy $10.7 billion of cash on its balance sheet, but that's balanced by an almost equal ($9.2 billion) load of debt. Investments in product development are a good attempt at driving organic growth, but it's doubtful that eBay can return to double-digit user and GMV growth.

*eBay's Q1 results reveal a company that's struggling to remain relevant and is having only modest success at growing its user base and GMV.

* It's difficult to envision this company still being healthy in five years. eBay already has tried many different measures to revitalize itself, all to mixed results.

Small sellers, the canaries in the eBay coal mine, have been pointing out many of these observations since John Donahoe ran the company. Wall Street generally continued to drink the kool aid passed out in quarterly reports by the company's CEO. 

It appears that now the company is going to be challenged by Wall Street to actually grow and perform instead of relying on promises of improvement based on ill conceived marketplace changes as those many so called 'improvements' have consistently failed to produce any significant improvement in GMV growth.

Regards,
Ric

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Readers Comments

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: val2525 This user has validated their user name.

Tue May 1 00:03:02 2018

"Do not be Amazon II. Be eBay."

^^^^ This exactly.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: maxmad This user has validated their user name.

Tue May 1 08:57:25 2018

You would have to be mentally unstable to invest in ebay stock,  

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: geoffreymason This user has validated their user name.

Tue May 1 10:20:35 2018

I agree that Whitman gets off lightly when CEO bad performances are assessed. It's true that most of the trouble started with her, and was exacerbated by her successors. I doubt that the lack of volume and intensity of criticism of her performance is because of post-chivalric grace, but possible residue from the women's movement -- we are chastised for bare-bones criticism of women; whereas, for men, anything goes, no matter how realistic and how harsh. As it should be. I believe in true ''gender equality'' -- take your lumps regardless of your sex. Did a bad job? Pay the piper. The concentration on Donahoe is probably the result of his undisguised disdain and contempt for his sellers, which makes him a handy (and deserving) target. Wenig follows in his footsteps. As a side note, I have always been impressed by the success of the women's movement, based really on principles employed by the black-liberation movement, but with far greater and profound success for the women's movement. I do wonder why that is.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: Linda This user has validated their user name.

Tue May 1 11:31:42 2018

If eBay did invest in itself and get new hardware to service  the amount of listings on their site so they don't have to do rolling brown outs like CA does to its citizens, if they dropped the AI and let people use their own intelligence for searching (get rid of a broken search engine), and tried to actually work with their sellers instead of forcing them to take sales off site in order to survive, then I would continue on with them. There were many years where I defended eBay against a lot of bad PR. Now not so much.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: BargainzBabylon This user has validated their user name.

Tue May 1 15:53:01 2018

Whitman took loads of flack for her leadership of eBay - it's just that she left 10 years ago and that's a LONG time in the etailing world.  

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

This user has validated their user name. by: bitbybit

Tue May 1 17:31:30 2018

Whitman aka NutMeg deserved all the flack. She left eBay bitter and intentionally brought Donahoe onboard knowing full well he would decimate the site coming from Bain. Everything is manipulated. Wall Street needs stronger lens to see through eBay's dense smoke and mirrors.

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: stillchecking This user has validated their user name.

Wed May 2 21:17:09 2018

The problem with eBay is they are not making any real growth. They continually ''FOOL'' the investors with shotgun plans to prop up the numbers quarter by quarter. eBay has no long term goals to make them sound and efficient for today's market.

The problem they have is how much more money can they squeeze out of Sellers before there is a revolt. It seems like every quarter they are taking money out of the pocket of Sellers one way or another to make each quarter look better.

They also forget that Sellers are Buyers. Listing on eBay and learning all the rules is getting harder and harder. You almost have to be a Lawyer to understand all the rules. Instead of an HONEST site with common sense rules to make more money for ALL they make it more complicated with More gaps for scammers to steal from Sellers. Someone who reads the community Boards and learns  about ALL the different scams that work, at least sometimes, there are many gaps that could be plugged. that are left open. WHY? eBay makes money off of the Scammers.

Their over Buyer eccentric MGB has hurt them causing Sellers to Sell only items they can afford to lose and not the beautiful high priced items that could be sold. It takes more Chinese trinkets to make up the money they have lost on this policy. This in turn costs more space and money to run the site. The spiral just keeps going down and down.  

They also have no control over the low priced trinkets that Sellers that flood the site with too many trinkets and to many listings make it so the unique and unusual things impossible to use.

Forcing Sellers to make up the catalogue is also strange. That needs to be controlled only by eBay. That is another point that does not make Seller's happy. eBay over and over keeps telling Sellers that If You don't want to play in our sandbox leave. eBay is living off of the pipe dream that new Sellers believe they can make money on eBay. New Sellers are hit in the face with a problem and realize eBay does NOT have their backs.

 

Perminate Link for Wall Street Starts Seeing through eBay Smoke and M   Wall Street Starts Seeing through eBay Smoke and M

by: deejae137 This user has validated their user name.

Thu May 3 23:21:44 2018

One thing that has not been mentioned exactly, but has been stated in expression, is the absolute disdain people have for eBay.  Beyond the stats, figures, new platforms, policies, etc. is how people "hate" eBay.  At some point the harm that has been done is deep rooted and out of principle many people will never return to the site.  A good analogy would be a "date rapist", would you ever go out on a date with this person again?  eBay is such a rapist to its' sellers (who in many cases were also good buyers) and the bitter taste in their mouths are the worst advertising for eBay.  In talking to many other sellers, they want the "fun" eBay it use to be, not the discount bottom feeding strip mall it is today.  The most value asset ever owned by eBay WAS its' loyal and unwavering community of "little people", but big tyrant CEO's (Donahoe and Wenig) thought they knew and were better than the little people.  Without the little people, you are not the big people.....  Too bad they can't wrap their big heads around this concept.

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