eBay (NASDAQ: EBAY) released its fourth-quarter 2021 results on February 23, wherein the top line was at the high end of the company’s guided range (5%). Solid momentum in the revenue contribution of Promoted Listings played a key role in the overall top-line growth.
However, the quarter witnessed a 9% year-over-year decline in eBay’s active buyers and an 8% decline in global active sellers. This was a continued momentum from the preceding quarter, something we had predicted before the release of the fourth-quarter print.
Interestingly, TipRanks’ new tool helped us determine early on that there might have been a top-line headwind stemming from a year-over-year downtrend in total visits to eBay’s website, globally. This total estimated visits number includes traffic from buyers as well as sellers, both active and potential. We found from the tool that the total estimated visits to the eBay website in the fourth quarter had declined 16.72% on a year-over-year basis.
Moreover, the decline in annual active buyers has been widening with each quarter for the past three quarters. Notably, this trend is also reflected in the tool, which shows a widening decline in the year-over-year comparison of total website visits to eBay.
Being an e-commerce company, about 90% of total revenues are generated from transactions taking place on the eBay marketplace. Thus, increased visibility of the website increases the sales potential. This had led us to the new tool in an attempt to get as many insights as possible into the website visit trends. The company’s fourth-quarter earnings commentary corroborated our findings.
On February 24, Benchmark analyst Daniel Kurnos reiterated a Buy rating on eBay, following the “much better than expected” quarterly results. However, he slashed the price target to $75 from $85, disappointed by the decline in active buyers, gross merchandise volume, and contraction in operating margin.
The rest of Wall Street is cautiously optimistic on eBay and has a Moderate Buy rating based on 8 Buys and 9 Holds. The EBAY stock price prediction leads us to an average price target of $71.56.
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