eBay Inc (NASDAQ:EBAY) stock declined slightly after Facebook Inc (NASDAQ:FB) launched its “Marketplace” service, which allows users to buy and sell products in their local communities through its platform. EBAY stock closed on October 3 at $32.55, down nearly two percent.
Some EBAY stock investors were worried because of the possibility that the social network giant could cannibalize the e-commerce company’s user base. Facebook indicated that it would continue to build new options and features for its Marketplace to provide people with the best experience. The social network giant said more than 450 million people visit buy-and-sell groups on its platform every month. (Source: “Facebook, Introducing Marketplace: Buy and Sell with Your Local Community,” Facebook Inc, October 3, 2016.)
Does Facebook’s Marketplace pose a significant threat to eBay stock?
I don’t think so. The social network has made it clear: it “does not facilitate the payment or delivery of items in the Marketplace.” As I understand, it is not acting as an online retailer, but it is providing users another way to connect with people in their local communities. I believe that Facebook’s Marketplace is more of a threat to Craigslist, Inc. than anything.
eBay Aims to Attract 100 Million New Users
During an event in Last Vegas in July, eBay CEO Devin Wenig promised to attract 100 million new shoppers with advertisements targeting millennials. According to Wenig , the company will go after customers wherever they gather together, including social media networks such as Facebook, “Snapchat,” and “Pinterest.” He added that eBay would also boost its efforts to lure customers in emerging markets such as Turkey.
In a recent interview with Bloomberg, Wenig said he wants eBay to succeed in areas where Amazon.com, Inc. (NASDAQ:AMZN) slacks. In other words, his goal is to differentiate eBay from the e-commerce juggernaut. According to him, “The world doesn’t have to choose between Amazon and eBay. The world can comfortably have Amazon and eBay—and it will.” (Source: “How EBay’s CEO Plans to Take On Amazon,” Bloomberg, September 19, 2016.)
eBay’s management team is focused on implementing key strategies to innovate its shopping platform to deliver relevant, persistent, and personalized experiences to customers. Structured data is the foundation of the company’s innovation.
eBay is innovating its platform to achieve its primary goal: to become the shopping destination of choice to ensure its long-term success. The company acquired SalesPredict to support its artificial intelligence (AI), machine learning, and data science efforts to build the best shopping platform. The company also acquired Expertmaker as part of its structured data initiative. Expertmaker specializes in providing intelligent solutions powered by AI, machine learning, and big data analytics.
In the second quarter, the company reported progress in its strategy. It reached the one-billion live listings milestone for the first time, and approximately 15 million structured data pages went live. Its active buyer base was 164 million, with a steady trailing 12-month growth rate of four percent. Management also noted an improvement in its search engine optimization (SEO) traffic. Its customers added 3.1 million new product reviews, bringing to a total of near 12 million on its platform.
eBay reported that its platforms including “Marketplace,” “Mobile,” “StubHub,” and “Classifieds” grew during the period. Its gross merchandise volume (GMV) was $20.9 billion, up four percent on a reported basis. The company’s revenue increased seven percent to $2.2 billion and its adjusted earnings went up two percent to $0.43 per share. (Source: “eBay Inc. Reports Second Quarter 2016 Results,” eBay Inc, July 20, 2016.)
EBAY Stock: Expanding its International Footprint
It is also using machine translation technology to break down language barriers and promote cross-border trade, allowing buyers and sellers from different countries to connect with each other on its platform. (Source: “eBay’s Machine Translation Technology Breaks Down Borders,” eBay Inc, October 3, 2016.)
In August, eBay completed its acquisition of Ticketbis, an international ticket marketplace with a presence in 48 countries, and Ticket Utils, Inc., an independent provider of software that helps large ticket sellers manage their inventory and distribution.
The acquired firms will become part of eBay’s StubHub business, the biggest ticket marketplace in the United States. The acquisitions are expected to accelerate the company’s footprint overseas.
The Bottom Line for EBAY Stock
eBay may not beat Amazon on its game, but eBay has the capability to distinguish itself from that e-commerce giant. Its CEO is well experienced in running a global technology company, and he has a clear vision and solid strategy for eBay stock to achieve long-term growth and profitability.
It is important to note that the company has been consistent in delivering quarterly earnings and revenue that topped the consensus estimates of Wall Street analysts. For the quarter, eBay expected its revenue to increase as much as seven percent to $2.19 billion and its earnings to increase two percent to $0.44 per share.
Wall Street analysts believe that eBay will continue to outperform the market. The company gained more than 27% in stock value over the past year. They have forecasted that EBAY stock could increase around 23% to $40.00 per share over the next 12 months.