Can EBay Compete With Amazon?

Photo Credit: Marcos Castellano

eBay, Inc. (EBAYInformation Technology - Internet, Software & Services | Reports July 20, After Market Closes

Online auction house, eBay is scheduled to report Q2 earnings this Wednesday, after the market closes. eBay is one of the pioneers of ecommerce, but has been falling behind Amazon and is now losing footing to WalMart’s rapid online growth. Meanwhile earnings are still struggling to rebound after the company spun off PayPal into its own publicly traded entity. As you might suspect, earnings have been lackluster lately, seeing a huge drop after PayPal went it own way in Q3 2015. Expectations remain relatively muted head into ebay’s second quarter report

The Estimize consensus is looking for earnings per share of 43 cents on $2.17 billion in revenue, 1 cent below Wall Street on the bottom and right in line on the top. Compared to a year earlier this represents a 44% decline in earnings and 51% fall in sales. Fortunately the stock is a positive mover during earnings season. Shares typically make a 3% jump a month after earnings are announced. 

Online auctions have lost their luster in recent years and no longer look like a viable business moving forward. eBay has taken notice and is slowly abandoning its core business in favor of more “buy it now” options. Given its current struggles to gain traction in the ever changing consumer environment, the Brexit won’t do them any favors. Last quarter eBay pointed to strong performance in Germany and United Kingdom as a primary driver of revenue growth. With the Pound and Euro in a freefall over the past few days this should add to eBay’s woes.

Not counting PayPal, ebay’s first quarter wasn’t that bad. Net revenue increased from $2.06 billion to $2.14 billion, reflecting a 4% jump between 2015 and 2016. Additionally, operating margins and cash flow from continuing operations saw a considerable jump. Still currency headwinds and stiffer competition are concerning for ebay moving forward.

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David Reynolds 4 years ago Member's comment

As much as I like #eBay, there's no way they'll every beat #Amazon. Amazon is far more innovative, has better customer service, more buyer protection, a proper review system, and an entire echo system with Echo, Kindle Fire, etc. $AMZN $EBAY

Somesh Ramnani 4 years ago Contributor's comment

I agree. $AMZN has stepped up and clearly made itself the top dog in this industry. Their products and services are for more attractive than $EBAY