Analyst: eBay Will Have A Rocky 2009


Media companies of all kinds are expected to struggle this year for many of the same reasons, but Collins Stewart analyst Sandeep Aggarwal says eBay (NSDQ: EBAY) has some unique problems that could cause it to flail more than many of its competitors.

–Aggarwal made calls and other “channel checks” to gauge how robust eBay’s business was during the first quarter of 2009, and the news wasn’t encouraging. He says eBay’s Marketplace will lose market share to other commerce companies and could suffer a drop in profit margins as well. Aggarwal says the company is selling more goods for a fixed price, which is outside its sweet spot of online auctions. That has caused some customers to leave eBay for Amazon (NSDQ: AMZN), he says. In addition, discounts and promotions from eBay meant to lure customers back from Amazon have cut into margins. According to Aggarwal’s report, fixing these issues is apt to be a “long and arduous” process.

–Though many comparison-shopping sites rebounded in the fourth quarter 2008, Aggarwal says eBay’s didn’t get the same kind of uptick; he says that’s because merchants weren’t happy with the economics of the site. In particular, businesses complain that the rates charges them to refer traffic to their sites are too high.

eBay is still having a hard time figuring out how to incorporate Bill Me Later into its operations. Aggarwal conceded that BML converted more users to customers than PayPal, but said eBay will likely continue to struggle integrating the business (acquired for $820 million in October 2008) throughout this year and into next.

Those operational problems combined with Aggarwal’s view that eBay shares are overvalued after a 50% increase over the past five weeks led him to downgrade the shares to a “sell.”



Agree 100% with Allan Kraig – EBay shot them self in the leg. CEO out of place – changes that was made in 2008 drive away a lot of small personalized sellers and customers who follow them. Also eBay forgot – seller is also a buyer, and those who gone from the site with frustration will not only never sell but also never buy again.


"Has he seen eBay’s P/E ratio of 10"

Yes he did and determined that as the E in P/E FALLS, that ratio increases!

It isn't rocket science, EBAY has been bleeding for 2 years now and growth in their core business is actually contracting! You don't deserve a high multiple when your business is shrinking…….Campbell's Soup is growing quicker than this baby for god's sake.

As for Amazon…..well we all know that baby is stuck in the .com boom days, it's bubble will find it's prick sooner or later, they always do.


I believe the shift of focus for the smaller sellers to the Large businesses is going to be the death of eBay. Buyer came to eBay to buy from individuals, not TigerDirect or Now those same buyer are following their favorite sellers to the other Marketplaces.

The individual seller made eBay…and they will break eBay.

NYM Arts

Thank You Rory :o)
Yes, Ebay is indeed a Sell.
I will also add,
We (Former Ebay Sellers and Artists) Did NOT go to Amazon.
We are Now Proudly Engaged at BONANZLE.
If Ebay was So Great, it would be BONANZLE.
Checks and Money Orders RULE THE DAY !
The Door to Prosperity Hangs Wide Open at BONANZLE !
I see No Reason to EVER go back to Ebay.


Weren't these same analysts the ones who pumped all stocks before 2000 and before the current fall? This man's point of view is in direct conflict of what eBay management team presented in its anual media day a month ago. In there eBay predicted that its revenue should be doubled in couple of years. One look at the progress Paypal and Skype have made it's easier to understand the calculation eBay management has predicted rather than an outsider who is trying to make a name for himself and states the obvious of how terrible the economy is. Has he seen eBay's P/E ratio of 10 as compared to mid 40s for Amazon and Yahoo? This guy is either too stupid to analyze the financial statements properly or he is in up to something.

Allan Kraig

eBay has feathered it's own bed in alienating its customers and sellers with its conctant non working changes, undervalueing its smallers sellers who are ebays most loyal buyers as well .. There is a laundry list of things that ebay has done to cut its own throat, i'm sure most have heard them all from the changes in the feedback system, the huge increase in fees in eBays attempt to make up its short fall in profits during 08 & so on … eBay can pull out of this dive in short order if they get the balls to fire the inexperienced ceo who never even bought anything on ebay let alone try to sell there & put Pierre back at the reins of his baby to build back up its customer and seller loyality once again .. If they let this goon go much furthur than eBay will be in a ditch that it will not be able to drive out of … this time it's not the economy stupid it's the lack of good judgement from an arrogant CEO with no on line selling experience & with no people skills .. Allan Kraig

John Smith

Dear Analyst,

Everyone is going to have a tough 2009!


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