eBay Inc and its rival Amazon.com as well as Facebook Inc were the subject of a recent analyst report. The report dealt with e-commerce activity in China, as checked by CLSA. CLSA analyst James Lee visited China for a ‘channel checks’ mission on Amazon, eBay and Facebook cross-border trade e-commerce activity. American tech giants dominate most of the markets outside the US, but they face difficult time in the Chinese market. Mr. Lee also held a negative view for eBay Inc regarding their initiatives in the Chinese market.
eBay Inc Loses out to Peers in China
As for Amazon, the country had imposed a new import tax on foreign goods online in April 2016. After that, the analyst’s channel checks show slowing cross border trade. Mr. Lee believes that the decline could be transitory. This is because Chinese consumers avoid online shopping to adjust the price hike. They even do so to swing demand to the unofficial e-commerce platform. He noted that Amazon Global Stores includes a stock keeping unit (SKU) of 10 mn in the country. This is far more than Alibaba’s T-Mall Global and JD.com’s JD Global, both hold 4 mn SKUs each.
Coming to eBay, the research firm’s checks showed that the firm faces tough competition for its Chinese export division. Amazon has increased its export business in China to $3 bn. This is about 40% of that of eBay. Due to the risk to the San Jose-based firm’s cross border trade, Mr. Lee sees some upside to his projection for Amazon.
However, closer home, it seems that eBay’s management is able to make hay while the sun shines for Amazon. During the Q2 2016 earnings call, the CEO Devin Wenig had spoken about Amazon’s second annual Prime Day. This fell on July 12. Devin said that it was a “really strong day” for his own firm too, though he did not provide further details.
About Facebook, the analyst met the Chinese ad agencies to talk about WeChat. He also talked about the entire mobile messaging industry in the country. The analyst found “lots of chance to follow the successful product roadmap of WeChat”. He explained that WeChat offers a product roadmap for its Messenger app. Mr. Lee projected that the monthly revenue per active user stands at $6. He also expects it to be maintained in the future.
F/X Headwinds Continue, but so Does Growth
When it comes to foreign trade, China obviously isn’t the only country to be looked up to. A week ago, Smarter Analyst had reported that the firm’s growth is still on track as per a top analyst. Online auction and e-commerce leader eBay Inc left August with steady mid single digit Y/Y growth. Colin Sebastian from Baird wrote, “F/X headwinds do persist. But, we expect that shares would react positively to any further gains to core underlying growth. Q3 growth estimates remain unchanged.” Figures about the F/X headwinds were discussed during the earnings release as well.
“We are amid ongoing positive secular e-commerce growth trends and the potential for faster growth in 2H16. More importantly, in the quarters and year ahead, this will be seen more clearly.” Colin is a 5-star ranked analyst. TipRanks.com measures analysts’ and bloggers’ success rate based on how their calls perform. As per the site, Sebastian has a yearly average return of 20.5% and a 81% success rate. He has a 18.4% average return when recommending eBay Inc , and is ranked #5 out of 4147 analysts.