Tuesday, January 22, 2008

Deutsche Bank Drops eBay Target Price from 30 to 24

Deutsche Bank maintains their Sell rating and had this to say about the Q4 Earnings Call.

4Q Preview

eBay needs to beat our 4Q rev/EPS estimate of $2.12Bn and $0.40 by $53mn in revs and $0.02 in EPS, due to the weaker dollar. With listings slightly shy of our 543mn forecast, we think that a $50mn beat may be tough. On the '08 outlook, we think the company needs to: (1) move to final value fees vs. the competition; (2) spend in advertising to drive future growth; and (3) reduce headcount to maintain its profit levels. However, the issues on broader consumer spending and weak customer metrics and US listing declines represent headwinds to an improving outlook.

eBay Korea provides insight into the US changes/impact in ‘08 While the rev/profit impact is unclear from a US fee change to commissions, we think that similar changes at eBay Korea in '06 should provide some perspective. eBay Korea growth/profit margins decelerated from 46%/26% in '05 to 2%/15% in '06 (post fee change) and 7%/3% in '07 YTD. We think eBay US margins could see a similar fate, given the greater competition in the US.

Tomorrow will be an interesting day.

3 comments:

Jay said...

Interest in eBay within the community has pretty much evaporated. Take the traffic for a site like Auctionbytes.com:

http://www.alexa.com/data/details/traffic_details/auctionbytes.com

If you make the (reasonable) assumption that persons interested in eBay issues and businesses visit Auctionbytes on a regular basis (and it used to be a daily stop for almost everyone in our business) it would appear that many sellers and interested parties are no longer interested.

Potentially this opens the door to new sellers and opportunities if EBay can turn this thing around somehow.

Jay said...

Sorry, I see the URL got cut in half. Here's a link to the full URL:

http://tinyurl.com/3c8qhh

Choose 'Page Views' and a 3-year or 5-year chart to see a snapshot of the traffic to this one website.

Randy Smythe said...

Jay, I think a number of things may be responsible. Competition from bloggers, seller fatigue, vendor fatigue and maybe not enough coverage of Amazon and other channels. Your points are valid as part of the overall problem.

My blog on the other hand has seen a huge growth Y/Y but I started with 6 uniques visitors a day. If Auctionbytes links to one of my posts I see a 3 fold increase in visitors.

Auctionbytes is still the number one source for information on eBay.