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eBay on a Buying Spree

Posted on Thursday, Oct 24th 2013

Recent reports released by Shopper Trak don’t offer a positive outlook for retailers this holiday season. According to the report, holiday sales this season will grow 2.4%, recording the slowest growth since 2009. The downturn in spending is already visible in other metrics. According to a comScore tracker, e-commerce sales in the US grew 13% in Q3 compared with 16% growth reported in Q2. Growth slowed in Q3 to just 13% growth from 16% growth in Q2.

eBay’s Financials

EBay’s (Nasdaq: EBAY) Q3 revenues grew 14% over the year to $3.89 billion, falling short of the Street’s expectations of $3.91 billion. EPS of $0.64 was marginally ahead of the Street’s projections of $0.63 for the quarter.

By segment, Marketplaces revenues grew 12% to $2 billion, with the number of active users growing 14% to 124 million. PayPal’s revenues grew 19% to $1.6 billion.

For the current quarter, eBay projects revenues of $4.5 billion-$4.6 billion with EPS of $0.79-$0.81. Analysts were looking for revenues of $4.64 billion and earnings of $0.83 per share. EBay attributed the weak outlook to depressed macro economy and the recent federal government shutdown, events which have caused consumers to be more cautious of their spending.

EBay expects to end the year with revenues of $16 billion-$16.5 billion with earnings of $2.70-$2.75 per share. Analysts were expecting revenues of $16.18 billion with EPS of $2.71 per share.

eBay’s Acquisitions

As part of its efforts to speed up product delivery, earlier this week eBay announced the acquisition of London-based Shutl. Shutl is a startup that uses an efficient network of couriers to deliver products within an hour. Shutl operates the service in New York City and Chicago in the US, and it offers 24/7 service in more than 50 towns in the UK. Last quarter, eBay announced a service that lets users pay a fee of $5 for same-day delivery for purchases of at least $25 from either one or more participating local retailers. eBay plans to use Shutl to expand these operations into Chicago. Terms of the acquisition were not announced.

Earlier this month, eBay also acquired Braintree for an estimated $800 million. Chicago-based Braintree is known for its smartphone and tablet payment app, Venmo. Venmo enables single-click payment for transactions and does away with the need to re-enter payment details each time a user makes purchases on different mobile apps. Venmo also enables payments to friends using the social network. eBay will be able to leverage Venmo’s mobile payment processing capabilities to enhance PayPal’s offerings.

Last month, eBay also announced the acquisition of Seattle-based Decide.com. Decide.com is an online shopping research service that analyzes data to predict price movements for retail products like consumer electronics and housewares. eBay plans to deploy Decide’s tools on its platform to help consumers make smarter purchasing decisions.

Meanwhile, eBay continues to add site customization features, and as part of this effort, it announced the acquisition of Bureau of Trade for an undisclosed amount. San Francisco–based Bureau of Trade operates a curated online marketplace that offers unique products for men. As part of the acquisition, the company’s founder, Michael Phillips Moskowitz, will join eBay’s team to share his expertise and help eBay’s users discover products that are best suited to their tastes and preferences.

The stock is trading at $51.83 with a market capitalization of $67.1 billion. It touched a 52-week high of $58.04 in April 2013.

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