The internet giant eBay Inc. [NASDAQ:EBAY] has played a vital role in the growth of the global ecommerce market. For over two decades, as a true marketplace, eBay has been connecting buyers and sellers directly. However, with the strengthening presence of Amazon, Alibaba and many other homegrown players in developing markets like India, eBay is finding tough to stay afloat.
The once dominant player of the global eCommerce market finally finds time to sculpt its various parameters in accordance with the market strategy.
eBay, which was infamously spreading like an addiction in the US in 1999, has been finding it tough to deal with the growing competition. From being a leading online marketplace, connecting buyers and sellers, to offering deals eBay has been on a roller coaster ride.
eBay’s share price had touched $24.5 during its peak time in 2004, but came down crashing to mere $4.57 in Feb 2009. Between 2005 and 2007 the company lost almost $30 billion in its market cap. The valuation of Skype, the company acquired by eBay in 2005 for $2.5 billion, tumbled to half in 2007. Amazon and Alibaba kept growing at the cost of eBay and all strategies employed by eBay, kept failing one after another.
However, eBay’s $50 billion turnaround of eBay in the following five years is an interesting case study worth reading time.
Glaring notice on New year’s Gaze!
A year back the share value of eBay reached an all-time high, touching $45. But the market scenario changed fast for eBay as other eCommerce players continued luring online shoppers and the brand eBay started fading out. The company failed to capitalise and soon the share came down crashing to nearly half by the end of December 2018.
Indeed, it was a warning bell for Elliott and he came heavily on eBay, criticising its employed policies and strategies then.
The New Year’s gaze thrilled eBay with a glaring notice from its influential investor Elliott Management stipulating a five-pointer action plan.
The red-hot notice rebuke the veteran in ecommerce player that it has been washed out completely in the last year losing 20% value in the equity market. And retrogression of the overall market performance is about –35% to -60% comparatively to its rival industry competitors.
Elliott suggested that eBay’s marketplace is its utmost core strength and make efforts to empower them.
“Despite its remarkable history as one of the world’s largest e-commerce platforms, eBay as a public-company investment has underperformed both its peers and the market for a prolonged period of time.” as quoted in the ELLIOTT Management’s Fiery Notice!.
As a piece of stringent advice from its substantial investor eBay has appointed two new independent board of directors, Jesse Cohn from Elliott Management and Matt Murphy from Marvell Technology, as the company starts to streamline its rejuvenation techniques.
eBay got pushed to scrape off its subsidiaries
With the appointment of new directors, eBay is off to a whole new start apparently. Elliott, run by billionaire Paul Singer, has proposed five point strategy to help eBay win back lost ground. One of the strategies is to sell off its cheering subsidiaries StubHub and ebay Classifieds as a major scrap off.
“We all share common ground: we see tremendous opportunity ahead and want to see EBay’s full potential realized over the long-term,” eBay Chief Executive Officer Devin Wenig said. “The initiatives we are announcing today are the result of this constructive dialogue.” as reported in the Bloomberg Quint.
It is expected that eBay’s stake prices would be hovering $60, if the good old auction-web company follows Elliott Management’s quality proposals.
eBay has also taken various other measures to boost the confidence of its investors, stakeholders and employees. The company has unleashed the maiden dividend scheme for its shareholders and assured to pay back over $7 billion in capital within two years of time span. The company is also slicing off 135 jobs as a fat cut and reorganizing its regional leadership team in one single global team.
In the past three years, the inventories of eBay have soared up to 1.2 billion up from 850 million. Additionally, 20 million new customers were sourced to enhance the customer base to 179 million on the whole.
Once again, eBay is all set to bounce back with the new strategy as a result of all the criticism Elliott posed. Revamping its strategic reviews and counting on the various sensitive market is one of the major strategies eBay is banking upon.
For eBay it is just a storm to pass by. There would always be calm after the storm. So, all we need to do is just sit back and watch the game of the veteran who probably knows the industry better than anyone else.