Morningstar | Marketplace Enhancements and Portfolio Moves Offer Catalysts, but eBay's Long-Term Outlook Muted
EBay finds itself in a position of adapting to an evolving digital commerce landscape as well as changing seller and buyer behaviors. An improved marketplace experience prioritizing unique product selection, improved seller tools (including a streamlined listing process and promoted listing advertising), data-driven merchandising, new structured data/AI investments (focused on optimizing search engine listings, improving the user experience, and enabling dynamic pricing), and increased mobile capabilities are having a positive impact on customer acquisition trends. We also see eBay further entrenching itself as a leading C2C platform through first-party promoted listing advertising platform (which is on pace for $700 million in revenue in 2019 and could be a multibillion-dollar revenue opportunity longer term) and in payment intermediation (which also represents a multibillion-dollar revenue opportunity at scale), which should solidify the network effect behind our narrow moat rating.Despite platform enhancements, first-party promotional listings, and payment intermediation, we still harbor concerns about eBay's ability keep occasional users engaged as Amazon and other e-commerce marketplaces continue to find new ways to bring small and midsize business sellers onto their marketplaces. This is the basis for our organic revenue growth outlook in the midsingle digits (below our global e-commerce growth projections in the low double digits) and expectations of only modest operation margin expansion (including payment intermediation investments and other seller and buyer acquisition efforts) the next five years. This is consistent with management's commentary about eBay's longer-term sustainable growth rate being somewhere above retail but below e-commerce.We're constructive about eBay shedding its noncore marketplaces while "reviewing the role and value of StubHub and eBay Classifieds in its portfolio to determine the best path forward to maximize shareholder value." While both platforms have carved out a differentiated network of sellers and buyers, we see limited cross-selling opportunities and believe a sale could unlock value for shareholders.eBay is a global commerce provider, which includes its Marketplace, StubHub and Classifieds platforms. The company's Marketplace platforms include its online marketplace located at www.ebay.com, its localized counterparts and the eBay suite of mobile apps. The company's StubHub platforms include its online ticket platform located at www.stubhub.com, its localized counterparts and the StubHub mobile apps. These platforms connect fans with their favorite sporting events, shows and artists and enable them to buy and sell tickets whenever and wherever they want. The company's Classifieds platforms include a collection of brands such as mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen and others.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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