Sunday, April 13, 2008

Ebay summary.

Incoming week we have earnings call Q1 scheduled for eBay (EBAY). As I posted recently (Google acquires Skype) share price was at 15 times cash flow which showed good buying opportunity. Stock price is up by 20% in last 3 weeks. But how about Q1?

Ebay has changed fee strategy, decrease insertion fees for sellers and increased fee from each sale. Based on 3rd party research this change helped sellers to increase sales by 10-20%.

GMV (Gross merchandise volume) is key indicator for Ebay. It's a percentage growth (year on year) for total value of sold goods in USD. Last GMV was just 12% compared to 20% one year ago. All fee changes could show better than expected GMV which is only around 10%.

The big pain of previous quarters, Skype, also is doing better. Last quarter with 76% revenue increase. Skype accounts 5% of total Ebay revenue.

PayPal has last quarter revenue growth by 35%. And the unit accounts more than 25% of total Ebay revenue.

Changes in fee model altogether with weak USD could drive eBay Q1 results upside.


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