eBay Inc. EBAY announced that its Chief Executive Officer (CEO) Devin Wenig has stepped down. The position will be replaced by Scott Schenkel on an interim basis.
Devin’s resignation comes amid pressure from activist investors who are looking for a strategic review of the business. Reportedly, disagreement with 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 Devin Wenig has come as a surprise to many. Following the announcement of a management shakeup, shares of eBay slipped a marginal 0.80% (to close at $39.24 on Sep 25).
eBay Inc. Price and Consensus
eBay Inc. price-consensus-chart | eBay Inc. Quote
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 to fill in the CEO place.
Also, the company announced that Andy Cring, eBay's Vice President — Global Financial Planning and Analysis — has been appointed to serve as 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, indicating year-over-year growth of 2-3%.
Why the Shakeup?
eBay implemented this leadership change with a view to better align the company for growth.
The news comes at a time when eBay is conducting a strategic review of assets that include StubHub and its classified ad division. Devin, who served as CEO since 2015, made continued efforts to expand and bolster the business since its spin-off from PayPal.
eBay’s annual revenues had increased to $10.75 billion in 2018. Late last year, it made drastic changes to managed-payment systems, accepting different forms of payment. In addition, it altered the advertisement business in a bid to let merchants advertise on other sites to focus on promoted listings on its own site.
Despite these efforts, eBay struggled to maintain dominance in the e-commerce market amid rising competition, particularly from Amazon AMZN. According to eMarketer, Amazon commands about 38% of U.S. online retail sales, while eBay holds just a 6% share. Reportedly, Amazon’s revenues in North America were 13 times of that of eBay’s in 2018.
Therefore, a few changes including the departure of Devin could prove to be beneficial for the company. Now that Scott Schenkel will focus on e-commerce growth, it should also make strategies to solve other problems of long-term profitability.
For now, it is a wait-and-see approach as to where eBay 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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