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eBay: Expecting Downside as Piper Eliminates 'Top Pick' Status

by: Notable Calls May 14, 2008 | about stocks: EBAY    
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Piper Jaffray is removing eBay (EBAY) from its "Top Internet Picks" list and lowering its target to $38 from $40, after checks showed U.S. GMV meaningfully slowed in April. The Firm is lowering its 2Q U.S. marketplace growth estimate to 3% y/y vs. a previous 8% due to low buyer activity (eBay noted softening buyer activity at the end of Q1 on its Q1 conference call).

Increasing 2Q international marketplace to 18% y/y vs. previous 15%, driven by strength in international listings and only modest declines in conversion rates/ASPs. In total, only slightly lowering Q2 estimate - which remains above consensus views.

Removing EBAY as a 'top Internet pick' on weakness in U.S. GMV will likely be a near-term overhang.

Notablecalls: Notablecalls Network member Ugg thinks EBAY will take a dive following these comments. His exact words:

...The removal of the top-pick, combined with the lowering of their price target to $38, I suspect, will pressure the shares early on.

Me? I concur. Have learned not to mess with the Ugg!

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This article has 18 comments:

  •  
    May 14 09:56 AM
    Ebay is abandoning it's roots. The new policies are driving out small sellers and is leaving the site chuck full of junk that you can buy anywhere at a lower price.

    Increased fees and other policies have sharply raised the cost to sell there. Professional sellers are pushing their customers away from ebay. Many are using the site as a classified ad to find customers and direct them to a web site with lower prices.

    Various independent reports show about 60% of the items listed go unsold.
    Reply
  •  
    May 14 10:03 AM
    Forgot to mention some of ebays largest sellers are leaving the site totally.

    Bargainland was one of the biggest with over 1,250,000 feedbacks and they abandoned eBay when the most recent changes were announced.

    They started their own web auction site and have notified their million+ customers (i'm guessing) of their new site.

    www.bidtopia.com/

    They report that while traffic has decreased, profit is up since they've eliminated ebays cut of the profit.
    Reply
  •  
    May 14 10:47 AM
    EBay has offended sellers for the last time. Too many policies aimed to hurt sellers and encourage buyers to leave negative comments for honest, hard working people.

    What the fools at eBay are failing to grasp is that sellers are also BUYERS! If the sellers leave, they no longer buy on eBay, either. How hard is that to comprehand?

    And stop pushing your worhless payment service, Paypal, and let sellers accept any payment method THEY feel comfortable with, including Google checkout. The fact that eBay bans a legitimate payment service like Google checkout tells me all I need to know about eBay.

    They will do anything to make a buck off of their unsafe payment service and toss any seller who refuses to accept it. That's called a tying arrangement, eBay, and that's ILLEGAL. This company looks more and more like another Enron every day. RUN away from this stock ASAP!
    Reply
  •  
    May 14 11:40 AM
    In germany the competition grows as well. There are eBay-clones and new vertical killers, such as BornForSports for Sports Lifestyle market where users can even safe a listing fee and only pay if they are selling.
    Reply
  •  
    May 14 12:10 PM
    if you're looking for an ebay alternative, try ioffer.com

    The site is picking up steam!
    Reply
  •  
    May 14 01:42 PM
    Piper Jaffray, UGG et. al should pay a visit to eBay's user boards, where they are placing most "complaining"... threads on the back pages, but there are also plenty on the front pages as well. Indeed, ANY analyst worth their salary should be doing far more "in depth" research into the current situation and also bear in mind almost all of the "useful" metrics eBay feeds them are annual ones. NO company can alienate the majority of it's customers and then expect success. Success breeds success, failure breeds, well nothing, except huge shareholder losses. The ONLY thing which can lead to success for eBay is for their CUSTOMERS (the sellers) to be successsful, and a sell through rate which is mostly lucky to get to 40% is hardly doing that, especially when one figures in almost 25% of the gross sales goes to either eBay or PayPal in fees.
    Reply
  •  
    May 14 09:45 PM
    All I have to say is, "Well, DUH, what did they think would happen when they insulted their own customers?"

    I'm only a casual seller, of the "flea market" variety they are trying to push off the site, but I WAS an avid buyer on eBay, thousands of dollars a year including everything from used books to new computers.

    I am boycotting. When I needed toner for my printer, instead of searching on eBay, I found what I needed on ioffer and bought it there and paid with Google checkout instead of Paypal.

    I've made several purchases on the "other" sites since JAnuary 29, and exactly TWO on eBay (and one was on an improperly listed charity auction I knew would get pulled, so the seller got paid by me and eBay should be refunding the final value and listing fees).

    Yes, sellers are buyers, and sometimes buyers are sellers, so it doesn't make sense to insult and alienate ANY of the userbase.

    Do they think we're stupid?

    BOYCOTT VICTORIOUSLY . . . because they STILL don't get IT.
    Reply
  •  
    May 14 11:11 PM
    7 replies to this article and all with no love for ebay.

    That tells me something right there...

    Where are the glowing comments about the great deals, service and experience people have had at ebay?
    Reply
  •  
    May 15 11:19 AM
    As far as I know, eBay is on the decline, and auto part sellers looking for a great eBay alternative should go to justparts.com. Awesome site and customer service. They look like serious contenders and have much lower fees and commissions.
    Reply
  •  
    May 15 01:47 PM
    After two years of ebay lying to us, we finally had enough. It was very hard to leave as it had become so comfortable, but like an abusive relationship, i had to walk away. I will never buy or sell there again, even if they completely reverse the events of the past 2 years. The trust is gone and the party is over.
    Reply
  •  
    May 18 06:33 AM
    As a buyer, I can't stand to see what ebays done to it's site and it's users. I can't find the unique items I've purchased for years. Ebay hides them in Best Matches. I have to sift my way through po-up ads and business advertisements interuptions during my searches. Ebay has hidden my competions' bidder IDs so I can't check their patterns of buying anymore and I can't see if there's shill bidding on an item. The excellent prices are gone from ebay. I'm guessing the fee increases have changed that, since the other sites still have great deals and are growing fast. Many of my favorite sellers have left ebay and I have followed them to their new sites to purchase the items I want. I also hate that ebay is only allowing me to use paypal, if I want to pay online. Soon, all buyers will get only positive feedback, negating my years of 100% feedback history.

    I have read a lot of comments from ebay's boards in seller central and can see that sellers are just as angered as I am with these changes.

    If I want to buy ordinary new stuff, I go to my local stores which helps my community. I am NOW a BOYCOTTER, too. Ebay can keep their remodeled ebay. It's nothing like the fun happy place I've enjoyed in the past.
    Reply
  •  
    May 19 04:30 PM
    BOY how obvoious are all these commenters real intentions, when they say they are boycotting and then shilling comments and recommending newer sites

    ioferjustparts,etc,etc... just plain dumb sites and will never get traction,volume,and scale needed to survive.

    remember ebay still does not advertise significantly and when they do, look out ..this stock will trade higher

    as for piper...this is no big deal --these brokers do this for TRANSACTION BIZ....not for rank tables...

    and once this round of sellers is out of the market it should move higher...

    this business is primed for upside --economy slowing= more sellers/listings, paypal is a moneymaker and global growth just starting

    get long!

    Reply
  •  
    May 22 12:13 AM
    Stop the boycotts, You fail to remember that ebay ( e**y ) used to be a small unknown web site just as some of these other web sites were / are. How ever as word grows the traffic to these smaller sites will grow ( some have grown drastically in the past 6-10 weeks ). The negative press that e**y has / is / and will get from all the "New" Policy changes will backfire, and traffic will slow down.
    You probably forget that a lot of sellers are buyers as well ( like myself ), when they / we leave, we will take our buying habits with us.
    e**y will become a online strip mall just like JD has publicly stated. If I wanted to go to a strip mall I would / will shop locally ( we have a plenty of them here ). I have been on ebay since 1999 and I can honestly say I have NEVER heard seen ebay get this much bad publicly ( I feel they deserved it ).

    Last but not least: I am not telling you or anyone else to start boycotting, your free to do as you wish. Just as I am free to do as I wish. And I wish to boycott and to also help spread the word.

    If anyone wants more info on the Boycott all they need to do is visit the seller central forum on ebay, or google search: Boycott ebay. There are dozens of other web sites / forums with info as well.

    Mr H
    Reply
  •  
    May 28 08:45 PM
    It amazes me that wall street still eats the garbage PR ebay doles out to them. Is it because none of them is saavy enough to learn the inner workings of selling on ebay? If they did, they wouldn't touch that stock - its headed down the toilet. May take awhile but with sellers leaving and listing by individual sellers (as opposed to new junk from Buy.com and their ilk) is going down - the site will tank. Donahoe needed $10 million in order to do this? Any idiot could have destroyed the site for a couple hundred! Sellers have been saying for years they need viable auction sites to sell on - well, there are several up and coming and all they need is for sellers to list there AND get your buyers to come over too! The latter is the most important part. After a year of this, ebay will be on its knees and a certain full of himself CEO just may be on the unemployment line!

    I stopped listing on ebay after 10 years of 100 percent feedback. I'd rather quit on top then wait for some bad buyer to come along and take me down. Selling on that site right now is like playing Russian Roulette with your reputation!

    Things are so bad that the arts categories (which is where I list) are presently at only a 10 percent sell-thru rate! Foks - just like with the gas situation, you are being warned her by insider sellers - don't touch ebay stock.

    aceoart.net
    Reply
  •  
    May 28 10:05 PM
    What Ebay has created with the feedback changes is an atmosphere of fear and mistrust among its sellers. It has opened the door to scam's and scammers. I was an Ebayer when Ebay catered to the “Mom & Pop” sellers…back in the day. What brought buyers to that site was the uniqueness of the items, the Roy Rogers lunchboxes, the 1st Editions of Gone With the Wind, the Radio Flyers and the like. And who brought these items to Ebay?...the sellers…Mom and Pop! These items are getting fewer and fewer as the volume takes over and the quality and small sellers are forced out . “If you build it they will come”………The sellers made ebay what it is and brought in the buyers…Its the sellers who built it...its the sellers that made ebay the giant that it is and put it on a pedestal and it’s the sellers, that are going to “knock em off”.
    Reply
  •  
    May 29 04:46 PM
    I am a buyer only on the site in question. The new feedback doesn't bother me one way or another. Having been involved in a couple of auctions that reeked of shill bidding, I still gave no feedback rather than risking a neg in retaliation. When both buyers and sellers alike hate the feedback situation, I guess you could say it's at least balanced.

    What will drive me away is the loss of the small sellers. My interests are out of the mainstream, and I've noticed that the mass junk that most large sellers offer is the same as the junk anywhere else on the internet - not of interest to me. As the sellers get larger, the number of items that interest me goes down proportionally.

    Before long it won't be worth my time to sort through the tons of useless junk to find the few items I am seeking. Besides, most of the junk is available from regular vendors for the same price, but without Payhassle, feedback, or the shipping nightmare.

    Suffice to say, I'm not going to buy any estock in the ecompany anytime esoon. For me, larger sellers means much lower buyer incentive. If enough people feel the same way, fewer buyers will lower profits, lower profits will attract fewer investors, and on it goes down the etoilet.....
    Reply
  •  
    May 29 11:30 PM
    Very Very well said ebuyer!
    Reply
  •  
    Jul 15 07:53 PM
    The new page format has taken what was once a fairly simple interface and made if difficult to navigate. Why do they feel the need to be constantly changing things around? And the fee's used to be reasonable. I don't feel eBay should get one penny of the final price. Just charge for insertion. It is fast getting to the point where I may have to find another place to sell antiques. I'm starting to feel like eBay is taking advantage of me.
    Reply
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