eBay (NASDAQ: EBAY) announced that its CEO, Devin Wenig, has stepped down. He will be replaced by Scott Schenkel on an interim basis.
Devin’s resignation comes amid pressure from activist owners of eBay stock who are looking for the company to conduct a strategic review. Reportedly, disagreements between Wenig, the ex-CEO, and investors Elliott Management and Starboard Value regarding the sale of StubHub, along with eBay’s classified advertising business, led to Devin’s resignation.
The sudden departure of Wenig has come as a surprise to many. Following the announcement of the management shakeup, eBay stock slipped a marginal 0.80% (eBay stock closed at $39.24 on Sept. 25). As of late trading today, the shares are little changed.
The Price of eBay Stock and Consensus Estimates
Scott Schenkel, the Vice President and CFO of eBay, has been appointed as the interim CEO. The company is looking for both internal and external candidates for the CEO role.
Also, the company announced that Andy Cring, eBay’s Vice President — Global Financial Planning and Analysis — has been appointed to serve as its interim CFO.
Notably, the company has reaffirmed its revenue guidance for the full year. It continues to expect revenues in the range of $10.75-$10.83 billion, representing year-over-year growth of 2%-3%.
Why the Shakeup?
eBay implemented this leadership change to leave the company better positioned for growth.
The news comes at a time when eBay is conducting a strategic review of its assets that include StubHub and its classified ad division. Devin, who served as CEO since 2015, continuously sought to expand and bolster the business since its spinoff from PayPal.
eBay’s annual revenues increased to $10.75 billion in 2018. Late last year, it began accepting new forms of payment. In addition, it began letting its merchants advertise on other sites.
Despite these efforts, eBay struggled e in the e-commerce market amid rising competition, particularly from Amazon (NASDAQ:AMZN). According to eMarketer, Amazon commands a roughly 38% share of U.S. online retail sales, while eBay holds just a 6% share. Reportedly, Amazon’s revenues in North America were 13 times that of eBay’s in 2018.
Therefore, a few changes including the departure of the CEO, could prove to be beneficial to the company and to eBay stock. eBay will focus on its e-commerce growth, but it should also develop other strategies to boost its long-term profitability.
For now, it’s hard to say where eBay stock will head in the near future.
Zacks Rank & Stocks to Consider
Currently, eBay has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alphabet Inc. GOOGL and Itron, Inc. ITRI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Alphabet and Itron is currently projected at 17.5% and 25%, respectively.
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