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eBay Surges on Coronavirus Lockdown

Posted on Wednesday, Jun 17th 2020

The current global lockdown conditions continue to push online sales and e-commerce trends higher. Due to the improvement in its e-commerce business, etailer eBay (NASDAQ: EBAY) recently revised its outlook for the current quarter significantly. But the company realizes that the surge may be short-lived and did not improve its fiscal year outlook.

eBay’s Financials

eBay’s Q1 revenues fell 2% over the year to $2.37 billion, missing analyst estimates of $2.38 billion. Adjusted EPS was $0.77, compared with the market’s forecast of $0.72.

By segment, the Marketplace platform revenues fell 1% to $2.1 billion. Revenues from Classifieds platform fell 3% to $248 million.

Among key metrics, active buyers on its platform grew 2% to 174 million. Gross Merchandise Value (GMV) of goods sold on its platform fell 1% to $21.3 billion. The company completed the sale of StubHub to Viagogo in the quarter for $4.1 billion, subject to working capital adjustments. It is still evaluating potential value-creating alternatives for its Classifieds business.

At the time of its first quarter results announcement, eBay forecast second quarter net revenues of $2.38-$2.48 billion with an EPS of $0.73-$0.80. It expected to end the year with revenues of $9.56-$9.76 billion with an EPS of $3.00 – $3.10. Last week, due to the growth of e-commerce transactions in the recent past, eBay revised its outlook upwards. It now expects revenues of $2.75-$2.8 billion with an EPS of $1.02-$1.06. The market was looking for revenues of $2.48 billion with an EPS of $0.77.

eBay’s Product Upgrades

eBay continues to see significant traction in its managed payments segment. It is now processing more than $3 billion of GMV for over 32,000 sellers. It is expanding the market reach of this service and will soon be launching the service in several other countries including the UK, Canada, and Australia.

eBay continues to improve its user experience. Recently it introduced a new feature called Image Clean-Up that uses computer vision technology to deliver a consistent-looking buyer experience. The feature has been launched across all markets and will make the shopping experience more effective for Google Shopping on Android and iOS. Since its launch, it saw over a third of sellers using this new tool. eBay expects the adoption to translate to better conversion over time.

On the buyer experience, it saw an increased conversion drive by search improvements that were enabled by growth in structured data. Based on behavioral data, its algorithms recommend to sellers the information that can drive maximum sales from listings. It also raised the limit of saved searches for engaged loyal buyers from an earlier cap of 100 searches to improve their shopping experience.

eBay is helping small businesses navigate through the current crisis by offering deferment of fees, more free listings, and protected seller performance standards. To help smaller brick and mortar retailers, it is offering free listings and free store subscriptions for first-time sellers. It is also providing them with access to mentors who can help get them started on their digital journeys.

Besides small businesses, eBay is also partnering with government officials across local communities, state, national, and international levels to avoid price gouging, stopping false health claims, and preventing illegal products from being sold.

Its stock is currently trading at $48.12 with a market capitalization of $33.8 billion. It touched a 52-week high of $51.88 earlier this month. It had fallen to a 52-week low of $26.02 in March.

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