Trade Me shares hit all-time high; site previews new look

Trade Me shares [NZX:TME] rose 0.24% to a post IPO high of $4.10 this afternoon.

The company listed at $2.70 in December.

A solid week for Trade Me investors has seen a 5.3% increase in auction fees instituted Monday, following similar rises to classified rates. New competitor Wheedle (which launched Monday) hoped to exploit dissatisfaction at the fee rise.

But Wheedle was taken offline yesterday, indefinitely, after gaping security holes were discovered, including the ability to change another member's reserve price.

"Frankly we don’t take any pleasure in seeing businesses get a rough start like that," Trade Me CEO Jon MacDonald told NBR this afternoon.

"I guess we’ll see them back in due course."

Last night Wheedle sent an email to members saying it had commissioned an independent audit of its systems. A date for a relaunch was not given.

A second Trade Me rival, listselltrade, launched at 3pm this afternoon. NBR attempted to logon, but got an error message when attempting a password reset.

"It's a bit wonky," tweeted @Ruatara, the west Auckland man who first uncovered the set-your-own-price security hole in Wheedle. (Read more about listselltrade, and its problems this afternoon, here.)

Redesign
Trade Me has also been previewing a new look (snippets of which can be seen here: www.trademe.co.nz/help/sneakpeek).

Selected members are already using the site with the redesign. Mr Macdonald told NBR around 50,000 members had been invited onto the trial.

A few elements were still being polished, based on feedback. There was no set time to roll out the redesign.

Trade Me describes the home page redesign as "subtle rather than radical," with new links it says will make it faster and easier to access different sections.

Mindful of local competition, but eyeing offshore business
As the 5.3% fee rise was announced, Forsyth Barr's Rob Mercer told NBR Trade Me was getting closer to what he saw as the psychological 10% barrier (Monday's increase takes the commission on a $100 sale from $7.50 to $7.90). 

There were real growth opportunities, but not in selling more big ticket items and new goods rather than fee rises, Mr Mercer said.

Mr Macdonald underlined those points this afternoon. He reiterated Trade Me's drive to pull in more retailers through it new partnerships with international aggregators (who organise online sales for traditional retailers) and its purchase of local aggregator TradeVine. 

He also re-emphasised that offshore e-tail sites could use Trade Me as an efficient way to reach New Zealand buyers.

Most New Zealanders had heard of the big players like Amazon.com, but not the many niche e-tail portals, which had to buy Google Ad words to attract Kiwis' attention. It would be cheaper for them to take a store window inside Trade Me, where a mass audience is ready and waiting, Mr Macdonald says.

Future success in these areas was already built into Trade Me's share price. Mr Mercer has a hold rating on the company, based on his value (just under $4 a share).

Eclipses parent
On September 7, Trade Me eclipsed its parent company Fairfax [ASX:FXJ] in market value for the first time (at ASX close yesterday, Fairfax's market cap was $A952 million ($NZ1.2 billion).

Sydney-based Fairfax bought Trade Me for $700 million in 2006 ($850 million in today's dollars) plus a 12-month earn-out of $50 million.

Based on this afternoon's share price, Trade Me is now worth $1.62 billion.

After the public float of of one third of the company in December 2011, and subsequent share placement to James Packer, Fairfax retains a 51% holding.

For the year to June 30, Trade Me profit rose 8.4% to $75.6 million. Sales increased 13.8% to $142 million.

For the year to June 24, Fairfax lost $A2.73 billion (including a $A2.8 billion asset writedown) on sales that fell 6% to $A2.32 billion.