eBay INC 2011 3rd Quarter Earnings Call Numbers Of Interest To Small Business Sellers
20 October 2011
eBay INC CEO John J. Donahoe lead eBay's Third Quarter Earnings Call with the bold statement, "Q3 was another strong quarter for our company.", while the mood on Wall Street, "EBAY left investors unimpressed," was less energetic. Which leads to the routine question asked by small businesses on eBay, 'How did the Marketplaces section eBay.com do?'.
Numbers from eBay's 10/19/2011 SEC 8-K filing show net total Marketplaces quarter to quarter revenue growth essentially dead. Down from the previous quarter growth of "5%".
Keep in mind that part of the second quarter growth of 5% can be attributed to eBay's 6 July 2011 additional fee on shipping costs.
Marketplace revenues are principally generated through fees paid by users of eBay.com. The payees being the business who use eBay.com to sell products.
What of the number of products that eBay's less than 1% revenue growth came from?.
According to Medved.net eBay started the third quarter with over 138 million listings per day.
The third quarter ended with approximately 152 million products.
If you were selling on eBay.com, were you using PayPal?
The number of PayPal payments made was a health "6%", compared to the previous quarter's increase of "2%." The PayPal payment volume however was down to "2%", compared to second quarter's "5%" increase.
According the eBay.com numbers, the "Take rate" has remained stable for the past year. The third quarter "Take rate", that is the percentage of a PayPal transaction that Ebay INC keeps, stands at "3.78%."
eBay INC reports Bill Me Later losses decreased and increased. The Net charge-off rate has improved slightly to "4.3" from the second quarter's "4.4%." But the 90-day delinquency rate has risen to "2.6%", compared to the previous quarter's "2.2%."
With payment transaction losses remaining more or less stable, it remains to be seen why eBay INC continues to increase the amount of funds held from eBay's customers. Going from 2010 fourth quarter's $2,550,731,000 to this quarter's $3,295,115,000. Yes, that's 3.29 Billion dollars.
What about the continuing buyer and seller claims that there is less merchandise on eBay.com. How deep is eBay.com's product selection? Let's look at the value of merchandise sold.
According to eBay INC in their 8-K statement, Gross Merchandising Volume (GMV) represents the "Total value of all successfully closed items between users on eBay Marketplaces trading platforms during the quarrter, regardless of whether the buyer and seller actually consummated the transaction."
GMV quarter to quarter growth is essentially dead. Third quarter shows less than one percent movement, compared to second quarters "1%." And what of John Donahoe touting a GMV increase of 16%? It's the year to year increase. And this year's GMV, $14,666 million, is coasting downward off of eBay's record 2010 year end GMV of $15,039 million.
The GMV for vehicles decreased "-4%" quarter to quarter. A significant fall from the "9%" increase of the second quarter. Year to year Vehicle GMV growth is also essentially dead.
It appears from the above metrics that eBay sellers in aggregate have had their say in the matter.
Here's the non-seller stock market view.
At the start of John Donahoe's tenure, eBay INC's stock price was 29.84 (31 March 2008). Between then and now, the stock reached a top price of 35.35. It is currently trading at 32.14.
Trading was mildly frantic today with current volume at 25,643,763 versus the average daily transaction volume of 14,794,700 shares.
Which means for the average individual investor to materially benefit from eBay INC stock, they must sell and/or buy the stock. In other words, 'buy low, sell high', short, long, et al.
Over the three plus years the eBay INC Pop & Mom investor made $5.51 per share, or posted a 19% return on investment. Assuming they sold their shares when the stock peaked.
Then there's the competition.
Amazon closed at $71.30 on 31 March 2008. Amazon stock is currently at $233.61. Meaning the Amazon Mom & Pop investor would make $162.31 selling their stock now. If we have our sums right, that's a 227% return on investment.
- 31 March 2008 $17.50
- 20 October 2011 $40.99
- 31 March 2008 $143.50
- 20 October 2011 $395.31
With the tepid response to eBay INC's stock price over the past three plus years, there is possible good news for CEO John Donahoe, regarding Amazon's Third Quarter 2011 Earnings Call scheduled for 25 October 2011. It may never happen.
Steve Jobs (1955-2011)
“We do no market research. We don’t hire consultants. The only consultants I’ve ever hired in my 10 years is one firm to analyze Gateway’s retail strategy so I would not make some of the same mistakes they made [when launching Apple's retail stores]. But we never hire consultants, per se. We just want to make great products."