[August 23, 2019]
* Initial Thoughts *
I came across this stock when trying various online stock analysis tools. I listened to its 2Q2019 earnings conference call and briefly reviewed most recent company presentation. I found 58.com interesting because of its business model and new business initiatives such as 58 Town and Zhuan Zhuan (used goods marketplace) since they are to some extent related to my Pinterest analysis.
58.com and 58 Town are classifieds focusing on cities and rural areas respectively. One of the key concept for this type of platform is liquidity / density on each category / vertical. Eventually, the platform tends to concentrate on certain categories (58.com as example: jobs, real estate, used goods, automotive, and yellow pages and local services). Another concept is that certain verticals in the horizontal marketplace might be better served with dedicated products – described as unbundling / rebundling craiglist.
Source: The Gong Show by Andrew Parker
What 58.com is doing
Current challenge and opportunity
- Macro headwind has negative impacts on certain categories such as housing and jobs.
- There are some progress on 58 Town and Zhaun Zhuan. 58 Town has shown trajectory similar to 58.com in early stage per management team. The go-to-market strategy of 58 Town is social graph-based and has a an official “node” on each “town”.
- 58.com’s business models are well-understood and not very exciting. The company faces competition at different degree on each vertical / category. The entry barrier is not from technical side but from indirect network effect. Experience in execution and traffic / brand of 58.com are asset for vertical player incubation.
- Some initial analysis and talk to management team next week if possible
- Revisit Mercari (Japanese used goods C2C marketplace player)
- Pinterest business model analysis on parallel