eBay stock: Benefiting from a robust portfolio

American businessman Pierre Omidyar founded the international online auction and commerce platform eBay in 1995. eBay was one of the first companies to create and advertise an online marketplace that brought buyers and sellers of goods and services together. The firm, which serves both small firms and individual sellers, dominates the global e-commerce sector. San Jose, California serves as the home base for eBay.

Customers have the option of using one of the company’s international sites or participating in local Web sites put up in their own nation. There are eBay websites for the American and Canadian markets, the majority of Europe, and a number of Asiatic nations. Websites in Latin America are administered in collaboration with Mercado Libre, an online retailer with a similar business model. Although eBay sales mostly consist of auctions, fixed-price sales also account for an important percentage of all transactions.

eBay: The road to success

The methods eBay implemented to encourage secure, open trading that was available to everyone and almost anywhere had a significant role in the company’s success. The automated online payment system known as PayPal has been an important component of eBay’s transaction environment. PayPal was purchased by eBay in October 2002, but in 2015 it was split out as a separate business. Other significant purchases in the 2000s included StubHub, Shopping.com, Rent.com, and Skype (sold in 2009).

Fraudulent activity & legal pressure

Through a feedback system that enables customers to evaluate sellers on transactions, eBay depends on its users to act as regulators of the trading community. In the past, vendors could give negative feedback to their customers. However, this feature was deleted in 2008. Theoretically, dishonest merchants develop a bad reputation compared to legitimate sellers. In reality, some merchants got negative ratings as a result of issues with package delivery, for instance, and other suppliers received positive ratings for a brief period of time before engaging in fraudulent activity. eBay responded by providing instructional materials for best-practice trading. Additionally, eBay identifies categories of things that could be restricted and punishes sellers with potentially offensive or unlawful goods.

Nevertheless, eBay faced increasing legal pressure in Europe, where a number of manufacturers sued the company, claiming that it was involved in the distribution of counterfeit products because it took a commission from the sales that it facilitated without putting sufficient safeguards in place. The first €20,000 decision against eBay came in June 2008 when several high-end fashion firms in France sued the corporation for damages.

It is worth noting though, that through its charitable organisation, the eBay Foundation, eBay has donated a part of its earnings to local community projects all around the world ever since it was founded.

eBay & Certilogo

Recently, eBay said that it has completed the acquisition of Certilogo, a provider of AI-powered digital IDs and authentication for clothing and fashion items. The deal’s financial details weren’t made public. CEO Michele Casucci will continue managing the Milan-based business.

With Certilogo, consumers can verify product authenticity and receive trustworthy information about things while also assisting manufacturers in managing the life span of their items. The purchase of it by eBay suggests that the company wants to improve used clothing authenticity on its platform.

When eBay originally announced the purchase of Certilogo in May, the corporation said that it represented a significant investment in the developing secondhand fashion market. The business claimed that by making the deal, eBay solidified its reputation as a reliable place to buy second-hand clothing and accessories. A further benefit mentioned by eBay is that it gives customers greater confidence when they make decisions about their purchases that are more environmentally friendly.

As stated by Michele Casucci, CEO and creator of Certilogo, the collaboration with Certilogo will open up opportunities for customers and companies to connect, bringing up fresh ways to activate and increase interaction with the circular economy. The team is ready to start integrating its technology and infrastructure right away providing an effortless shift for customers, brand associates, and the wider eBay family toward a more environmentally friendly, connected future.

Over the past few years, eBay has been trying to improve its authentication and fraud detection skills, which is why it made its most recent purchase. The authentication company of Sneaker Con Digital, which confirms the authenticity of pricey footwear, was purchased by eBay in 2021. The business bought 3PM Shield, a fraud detection startup with AI technology, in February.

eBay shares

Compared to the Zacks Internet Commerce industry’s gain of 30.3%, eBay shares have returned 13.1% so far this year. The first quarter of 2023 saw e-commerce suffer from difficult macroeconomic conditions as Gross Merchandise Volume (GMV) fell 3% year over year to $18.4 billion.

However, the strong momentum for Promoted Listings helped eBay. Furthermore, structured payment capabilities and strong demand for advertising solutions continue to be major drivers. First-party advertisements saw a 31% increase while the overall advertising income increased by 23% in the first quarter.

GMV climbed by 3 points consecutively on an organic basis in the first quarter of 2023, led by ongoing outperformance in particular industries that helped the rest of eBay’s marketplace grow by about 8 points during the same period. Acquisitions like Certilogo are expected to further boost eBay’s revenue growth. eBay projects sales of between $2.47 billion and $2.54 billion for the second quarter of 2023. It is expected that revenues will rise by 1% to 4% on an annual basis. The expected range of non-GAAP profits per share is between 96 cents and $1.01. The 99-cent Zacks Consensus Estimate for earnings hasn’t moved in the previous 30 days.

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