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eBay’s Strong Growth Continues

Posted on Monday, Jan 21st 2013

Online marketplace eBay (NASDAQ:EBAY) continues its recovery over the course of the previous year. The stock grew 77% last year, compared with an overall S&P 500 index growth of 15%. The recent quarter’s results again reassure the market’s faith in the stock as it continues to climb.

eBay’s Financials
eBay’s Q4 revenues grew 18% over the year to $3.99 billion, ahead of the Street’s expectations of $3.98 billion. This was the 14th consecutive quarter of sales growth for eBay. EPS of $0.70 grew 17% over the previous year to surpass the market’s projections of $0.69. The company ended the year with revenues of $14.1 billion and EPS of $1.99.

eBay’s growth continues to be driven by its strength in the mobile segment, which helped increase revenues for both the marketplace and PayPal segments. Gross merchandise volume in the U.S. Marketplace grew 19% last year. Overall marketplace revenues reached a record high of $2.1 billion for the quarter, rising 16% over the year. During the quarter, PayPal added two million user accounts and revenues grew 24% to $1.54 billion.

For the current quarter, eBay predicts revenues of $3.65 billion-$3.75 billion, with EPS of $0.60-$0.62. The market projects revenues of $3.795 billion for the quarter and earnings of $0.63 per share. For fiscal year 2013, eBay projects revenues of $16 billion -$16.5 billion and EPS of $2.70-$2.75. The Street was looking for EPS of $2.74 for the year.

PayPal Expands Offline
eBay continued to strengthen PayPal’s presence in the offline world. It ended the year with agreements with 23 retailers, including Abercrombie & Fitch, Barnes & Noble, Radio Shack, and Home Depot. As part of the agreement, PayPal users will be able to pay for purchases using their PayPal accounts at these stores. In addition, the company also tied up with NCR Corporation, and in the coming months, PayPal will also be accepted in all stores that accept the Discover credit card.

eBay Remains Mobile Focused
During last year, eBay’s mobile payment volume grew to $13 billion and PayPal’s total volume grew to $14 billion. PayPal itself was projecting volume of $10 billion for the year. PayPals‘ mobile apps have been downloaded more than 120 million times.

A recent eBay market study shows that there is an increased probability of a purchase being made by users on mobile devices than those on desktop computers.  Mobile devices also contribute to more than 25% of eBay’s new customers. No wonder eBay remains focused on the mobile segment. It projects total value of mobile transactions for PayPal and the marketplace segment to grow to $20 billion during the current year.

eBay Acquires Svpply
Last quarter, eBay announced the acquisition of NYC-based shopping discovery site, Svpply. Svpply’s online tools gave members a feeling of online window-shopping by offering a social, curated, and personalized experience. Users are able to connect with friends over social networks and track goods they and their friends like. Users can also create a display gallery of their preferred products. Terms and the price of the deal were not disclosed, but as of early 2012, Svpply had more than 140,000 registered members accessing more than 620,000 product views a week. eBay plans to leverage the acquisition to add to its talent pool and offer customers more personalized experiences. 

The stock is trading at $54.21, with a market capitalization of $70.51 billion. It touched a 52-week high of $54.88 last week.

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