On Thursday last week Merrill Lynch issued an upgrade from neutral to buy on eBay stocks which has already lead to a bump in eBay’s stock price. What interested me more though was the reasons for the change of heart.
Merrill Lynch spoke to eBay users and concluded that some sellers are migrating from auctions to fixed price listings, tweaking postage prices to up DSR scores and generally being more responsive to buyers.
Also a comment by Stephanie Tilenius at last week’s Catalyst conference, that eBay had seen a 20-30 basis points improvement to DSRs since seller incentives were introduced (a basis point is a 1/100th) lends further credence to Merrill Lynch’s upgrade. It suggests that sellers are working to improve the service they give and that’s what eBay were aiming for.
Whilst these changes may appear small (I can’t remember ever getting excited about a 0.2 – 0.3 improvement in the past!), they’re significant enough to push the share price to its highest peak so far this year.
There is a change of direction coming from eBay since the management changes. The old management team were firmly focused on auctions whilst JD appears to be embracing fixed price listings. Seller performance being tied to seller incentives looks to be improving generally great customer service on eBay to even higher levels.
If these steps result in eBay’s share price increasing it’s a winning situation for buyers, sellers, investors and eBay themselves. The big question is what other changes will please investors and are their interests aligned with those of buyers and sellers?