Daily Management Review

Pandemic Surge In Online Purchasing Helps eBay To Beat Earnings Estimates


Pandemic Surge In Online Purchasing Helps eBay To Beat Earnings Estimates
The Covid-19 pandemic has prompted consumers to shop more form online sources which has benefitted the e-commerce firm eBay Inc as the company beat estimates of analysts for its sale revenues as well as profit for the holiday quarter. Announcing the results for its latest completed quarter, the company said that it emerge "stronger" from the pandemic crisis.
The strong performance of the company propelled its shares by almost 10 per cent.  
People all over the world have been forced to stay indoors because of the global health crisis with restrictions on movements being imposed by authorities to reduce and prevent the spread of the pandemic. This had led to an increase in orders from e-commerce companies such as eBay, Amazon.com Inc and the online platform of Walmart Inc.
"We'll be stronger coming out of the pandemic than we were going in," eBay Chief Executive Officer Jamie Iannone said in an interview with the media.
Iannone said, an updated strategy of the company which included attracting shoppers and consumers using fashion offerings including sneakers and watches, offering easier checkout and payment options and enhancing the usability of its mobile app had helped the company during the pandemic to do well.
He added that copying larger e-commerce rivals was not the focus of eBay which is a marketplace that is best known for offering unique or hard-to-find inventory.
"Our buyers were very active during the holiday season. In the United States, one in 10 online shoppers bought something on eBay. In Germany, that number was one in seven and in the UK, it was one in four," Iannone said on a conference call with analysts.

The first quarter revenues projected by the company was in the range of $2.94 billion to $2.99 billion which was well over the estimates of analysts of $2.53 billion, according to IBES data from Refinitiv.
"EBay is increasingly proving that it has the ability to sustain the gains it is seeing from Covid. We expect these trends to increasingly become ingrained in consumer behavior, providing support in 2021," Wedbush analyst Ygal Arounian said.
Its previously announced share repurchase authorization was also expanded by the company by an additional $4 billion.
The company said that during the last year, there was a 7 per cent growth in its annual active buyers to reach a total of 185 million active buyers globally. It also noted that the top trend for the holiday shoppers was the offers of refurbished gifts by the company.
The sale revenue for the company for the fourth quarter ended December 31 increased from $2.24 billion in the previous quarter to $2.87 billion which was also above the average estimate for revenues by analysts of $2.70 billion.
Excluding items, eBay earned 86 cents per share, above estimates of 83 cents per share.