Amazon at Record Shows Divergent Views on Holiday E-Commerce

Investors are taking divergent views on Amazon.com Inc. (AMZN) and EBay Inc. (EBAY) as the e-commerce companies head into the busiest shopping period of the year.

Amazon, the world’s largest Web retailer, reached a record today, climbing 1.3 percent to $381.37. EBay, operator of the biggest online marketplace, declined less than 1 percent to $48.76, a 52-week low.

Both are gearing up for the holidays, when online sales are projected to climb as much as 15 percent to $82 billion, more than three times faster than the total gain of 3.9 percent to $602.1 billion, according to the National Retail Federation. While Amazon’s stock is being buoyed by the growth of loyal customers and a positive outlook, EBay has warned investors of slowing sales.

“Amazon is increasingly viewed as a must-own technology, media and retail investment, not only benefiting from the seasonal ramp in online spending, but also big opportunities in enterprise tech,” said Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco.

EBay, citing “dramatically decelerating U.S. e-commerce growth” before the holidays, issued a fourth-quarter sales forecast on Oct. 16 that fell short of analysts’ average estimate. The company’s shares have declined 9 percent since then. Amazon’s outlook for fourth-quarter sales is $23.5 billion to $26.5 billion, in line with analysts’ prediction for $25.9 billion at the time.

In the two weeks prior to Thanksgiving, same-store sales at Amazon rose 35 percent, while EBay’s climbed 12 percent, according to ChannelAdvisor, which tracks services to retailers who sell through both e-commerce companies. Amazon generated 35 percent of 2012 sales in the last three months of that year, while EBay garnered 28 percent over the same period.

E-Commerce Outlook

“Data has added some fuel to the fire that was sparked by EBay’s cautious third quarter earnings call regarding holiday spending,” said Sebastian, who rates Amazon and EBay stocks the equivalent of a buy.

EBay, based in San Jose, California, fell to the lowest since Nov. 21, 2012. Amazon is trading at 2.3 times projected 2013 sales, while EBay has a ratio of 3.9 on the same basis.

“Investors are questioning if there is something endemic with EBay causing slower growth rates, or if there is a more broad slowdown in e-commerce,” said Robert Peck, an analyst at SunTrust Robinson Humphrey in New York who has the equivalent of a hold rating on the stock.

Jennifer Hakes, a spokeswoman for EBay, and Mary Osako, a spokeswoman for Amazon, didn’t respond to requests for comment.

Cyber Monday

As more shoppers gravitate to the Internet to buy toys, electronics and other goods, sellers are using promotions and mobile applications to extend Web sales beyond Cyber Monday, when consumers return to work after Thanksgiving and begin surfing the Web for deals.

Researcher ComScore Inc. (SCOR) is projecting Cyber Monday will be the busiest online buying day in history this year, increasing more than 20 percent to about $2 billion.

Amazon said millions of Prime customers signed up in the 90-day period before the company reported third-quarter results. Those members, who pay $79 a year for unlimited two-day shipping, are some of the company’s most loyal shoppers, and the growth in subscribers bodes well for Amazon’s holiday sales, according to Jason Helfstein, an analyst at Oppenheimer & Co. in New York.

“Amazon has done a great job of training upper-income customers,” said Helfstein, who has the equivalent of a buy rating on the stock.

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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