eBay Inc (EBAY) is overcoming its struggles in the e-commerce market against companies like Amazon (AMZN) by implementing a new strategy using data to improve user experience, and as a result is seeing growth in earnings per share, says James H. England, Lead Manager at Aster Investment Management, Inc.
“The perception in the market was that there was no growth left in the auction model and that companies like Amazon (AMZN) were winning the competition in fixed-price sales, resulting in continued e-commerce market share losses for eBay,” England said.
Consequently, EBAY put new management in place and fundamentally changed the way they managed the marketplace business, says England. By fixing problems with customer service and using technology to identify what seller behavior is most appealing to buyers, EBAY has improved the customer experience, leading to user growth and and an increase in earnings per share.
“The result of all this is that annual earnings per share grew from $1.73 in 2010 to projected earnings per share of $2.72 this year. In addition, the price-to-earnings multiple has expanded from 13 times when we invested to 20 times currently,” England said.
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