eBay (NASDAQ:EBAY) is working hard to reach its goal of $4 billion in gross merchandise volume (GMV) through mobile devices this year. [1] The company recently announced ePN Mobile, a new program which would enable eBay’s affiliates to better drive mobile traffic to eBay’s platform. [2] eBay competes with other e-commerce sites like Amazon (NASDAQ:AMZN), Wal-Mart (NYSE:WMT) and Overstock (NASDAQ:OSTK).
We currently have a price estimate of $39 for eBay’s stock, which is about 35% above the current market price.
Mobile Traffic Helps Drive Merchandise Sales on eBay
eBay’s affiliates are internet publishers, online partners and web sellers who are paid for driving buyer/seller traffic to eBay. [3] The ePN Mobile program is intended to share best practices with these affiliates so that they can further optimize mobile traffic to eBay’s sites. Additionally, this move should complement eBay’s recent acquisition of Zong – a mobile payment provider.
The point of all this is to drive more traffic to eBay’s commerce platforms and ultimately to lead to more transactions. In the near-term, improved traffic can lead to a higher fraction of listed merchandise being sold.
As you can see from our forecast below about a third of eBay’s listing ultimately convert to sales. An improvement in this conversion rate would have a positive impact on eBay’s stock.
In the long-run, more traffic can make eBay’s platform even more attractive to sellers and lead to additional merchandise being listed on eBay’s sites.
See our full analysis for eBay’s Stock
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