Why the StubHub Sale Won't Solve All of EBay's Problems
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What recent market headlines open this Money Briefing?
Here's your Money Briefing for Tuesday, November 26th. I'm J.R. Whelan at The Wall Street Journal in New York. Will selling off StubHub for $4 billion make eBay an attractive investment, or will it still be an Amazon's shadow? We'll check in with the Hurt on the Street team to find out. First, some money and market news you should know.
How did Bitcoin's price and China's policy affect crypto markets?
For Bitcoin, the latest party is over. The cyber currency closed Monday at about $7,100 after sliding below $7,000 over the weekend and touching a six-month low. Bitcoin was trading near $10,000 last month, but investors have been dropping off. And that's due in part to China reaffirming its tough stance on companies involved in cryptocurrency trading and fundraising. Since 2017, Chinese authorities have shut down 13 initial coin offering platforms, and 10 cryptocurrency exchanges. And the government has been developing its own digital currency. On Friday, China said it will shut down companies that market cryptocurrency exchanges that are registered outside China to mainland investors or that introduce Chinese customers to cyber currency trading venues.
eBay's $4 billion sale of its StubHub ticketing business to Viagogo is part of a broader plan by eBay to improve its image among both users and investors.
Why did eBay decide to sell StubHub for $4 billion?
Wall Street Journal Heard on the Street columnist Dan Gallagher joins us to discuss. So, Dan, what triggered eBay to begin exploring a sale of StubHub?
eBay had been struggling for a while, mostly because... most of the business is still marketplace, you know, the e-commerce business. And that's not been growing well, especially against all this competition from Amazon. So the stock hadn't been doing well. And so two activist investors earlier this year Elliott Management and Starboard both came into the stock roughly around the same time, even though they weren't coordinated with each other. And the Wall Street Journal reported that, broke that news in January.
How did activist investors influence eBay's strategy to divest StubHub?
But they came in and at least Elliott kind of made its issues public in the sense of feeling that eBay needed to divest itself of StubHub and the classifieds business and focus on e-commerce and free up some cash. And so that's kind of over the last year, I think eBay's been kind of slowly getting at, you know, looking at this and they found somebody to buy it.
Now, eBay's had a bit of an identity crisis. It's often compared to Amazon and its stock has really underperformed compared to Amazon. Does this sale of StubHub help those efforts?
Honestly, no, because all selling StubHub does is Essentially, from the standpoint of people who felt eBay's management team was distracted running an e commerce business and essentially a ticket reseller, you know, selling sub hub could theoretically help the management team focus more on on the market core marketplace business. So, you know, optimistically, if that happens, and they find, you know, new ways to grow marketplace, maybe that's good. But selling StubHub on its own doesn't really change anything from that dynamic. It does give eBay an influx of cash. Probably a lot of that's going to go to buybacks just because that's kind of how these things tend to work. And also, even $4 billion sounds like a lot.
Will selling StubHub meaningfully help eBay compete with Amazon?
Is there something they could buy that's going to put them anywhere near the scale of Amazon? It's hard to see that.
And eBay's remaining business has been very slow to show growth.
Yeah. In fact, growth there has been slowing. And it's... Much, much, much smaller than what Amazon has. I mean eBay is now doing about $9 billion in revenue from its e-commerce business and Amazon's online retail alone is going to do about $140 billion this year, a little over $140 billion. And that $140 billion is a 15% growth rate from the year before, whereas eBay's looks like it's more flat to down slightly. So you've got a vastly different scale. eBay even sued Amazon or threatened to sue Amazon earlier this year because they were complaining that Amazon was using kind of nefarious means to lure away eBay sellers onto Amazon's own third-party platform.
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Chapters
6 chapters
1
What recent market headlines open this Money Briefing?
0:05–0:23
2
How did Bitcoin's price and China's policy affect crypto markets?
0:23–1:29
3
Why did eBay decide to sell StubHub for $4 billion?
1:29–2:09
4
How did activist investors influence eBay's strategy to divest StubHub?
2:09–3:24
5
Will selling StubHub meaningfully help eBay compete with Amazon?
3:24–4:34
6
What are the likely uses of the StubHub sale proceeds and eBay's growth prospects?
4:34–5:28
Speakers
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