Will eBay Escape the Recession This Time?
Posted by: Rob Hof on January 23, 2008
After rising 7% on news of CEO Meg Whitman’s plans to retire in March, eBay’s stock gave back the gains in after-hours trading on a mixed fourth-quarter earnings report. The online marketplace met earnings expectations but its 2008 outlook fell short of analysts’ forecasts. It’s not yet clear whether eBay is being extra-cautious as a new CEO comes on the scene or expects more economic and competitive headwinds.
This year will be a pretty interesting test for eBay, and not just because of its struggle to recharge its core auctions and the transition to new CEO John Donahoe. In the slow economy that followed the dot-com bust in 2001, eBay kept leaping ahead, and Whitman attributed that partly to the fact that eBay’s business model did well in a recession, because that’s when people seek bargains and also a little spending money from selling their stuff on eBay. It appeared, at least, that eBay was something of a self-regulating economy.
Will that happen this time? With more competition from Craigslist and Amazon.com, that’s no sure thing. (Not to mention, the notion of a “self-regulating economy” looks pretty discredited in the wider world right now.) But at the same time, eBay could surprise the skeptics if its previously recession-resistant model proves itself once again.