AmTech analyst Tim Boyd notes that eBay’s listings in Q3 are up 30% year-over-year and 9% sequentially, which is an acceleration. But this isn’t enough to shake Boyd’s doubts. Boyd attributes the acceleration mostly to easy comps and a shift to lower ASP units:
We believe the strong listings growth acceleration QTD is primarily the result of easy comps in the U.S. and Germany (listings counts in both geographies were down materially Y/Y in 3Q07) and significant promotional activity. We also note that 19% listings growth in 2Q08 only translated into 8% GMV growth.
We do not get the sense that conversion rates have improved from levels seen in 2Q08, and we believe the shift toward lower-ASP units continues. eBay ‘ s recently announced changes to its fixed-price format pricing also add significant uncertainty to the outlook for take rates.
Boyd thinks that for Ebay to turn things around, it will have to demonstrate accelerating gross merchandise volume and active user growth. Boyd sums up his arguments against eBay in three points:
- As 8% Y/Y GMV growth in 2Q08 makes abundantly clear, eBay is hemorrhaging market share to competitors such as Amazon;
- The balance sheets of consumers in the U.S. and Europe continue to deteriorate;
- Against the backdrop of whammies #1 and #2, eBay is attempting to materially alter the form, function and functionality of its core marketplace.
Boyd reiterates his Sell rating and $20 price target.
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