Earnings

eBay’s Lukewarm Growth Concerns Activist Investor

eBay’s Lukewarm Growth Concerns Investors

According to a report in Bloomberg, eBay, one of the internet’s first and most well-known eCommerce companies, has investors concerned over sluggish recent growth.

Elliott Management Corp., founded by billionaire Paul Singer, said the company needs to change things, and fast, to recharge its business, arguing that the latest financial results confirm this view. Shares of eBay are down an estimated 18 percent over the past year.

“eBay’s fourth-quarter earnings provided another example of why the company needs to significantly improve operational execution and focus on its core marketplace business,” Elliott, which owns more than 4 percent of eBay, wrote in a letter on Thursday (Jan. 31). “Despite a rapidly growing eCommerce market, eBay once again lowered marketplace growth expectations to a paltry 1 percent for 2019.”

Elliott recently laid out a five-step plan to help eBay move forward, which included buying back some shares and going over eBay’s catalog of companies, including the ticket buying outfit StubHub.

“Despite its remarkable history as one of the world’s largest eCommerce platforms, eBay as a public company investment has underperformed both its peers and the market for a prolonged period of time,” Elliott wrote in a previous letter. The idea to jettison StubHub was especially strong.

StubHub was acquired by eBay for $310 million in 2007, and the eCommerce site has tried to expand the franchise overseas with the purchase of Spain’s Ticketbis in 2016.

“Elliott believes that eBay is worth far more — but change is urgently needed to address both public perceptions and real business issues,” the activist hedge fund said, noting that all three businesses could function more efficiently and profitably as separate entities rather than all existing under the single eBay umbrella.

It has been a rough year on the market for eBay, with its stock price down 22 percent over the last 12 months, though today the share price was up 12 percent in pre-market trading.

CEO Devin Wenig, for his part, issued the company’s first dividend and put $4 billion into the company’s stock repurchase program. He said he didn’t want to sell StubHub yet, or any other parts of the company.

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