eBay Watch: December Listings Surge, Yearning for Yahoo, Mercado Expectations

eBay's December U.S. Listings Surge

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Early indications are that Thursday's 20 cent promotion was incredibly successful. The 'rough-estimate' Medved listings data shows U.S. listings at 18.3 million, all all-time December record. In the last couple of years, by this time in the month, the traditional December slowdown had already just begun. It will be interesting to see the kind of pullback we experience in the remainder of the year. For now, expect great Y/Y U.S. metrics from research analysts next week.

Breaking up Yahoo!

I have mentioned several times in the past my rationale for an eBay (EBAY) merger with Yahoo (YHOO). Now trading near a 4 year low, an acquisition of Yahoo is surely a discussion topic at more than one boardroom around the world. With a takeover premium, Yahoo could fetch north of $40 billion. That would be a massive acquisition for any suitor, and certainly too big for eBay to consider alone.

That said, Yahoo's market value is derived in large part from minority investments including a 39% stake in Alibaba Group, a 30% stake in Alibaba.com, a 34% stake in Yahoo! Japan, and a 10% stake in Gmarket (GMKT). Some analysts estimate the value of these minority stakes to be as high as $12 a share (nearly half of Yahoo's total market cap). An acquisition of these stakes would be reasonably feasible for eBay who would immediately gain exposure and breadth in China, Japan, and Korea.

So a potential strategy for eBay would be to partner up with an interested buyer of Yahoo's wholly owned search operations. The obvious candidate would be Microsoft (MSFT), which sorely needs additional scale if it wants to compete in search. With a potential price tag of around $25 billion, Microsoft would be buying Yahoo (ex minority assets) at around 35x 2008 earnings, arguably an attractive price that is easy to digest.

Is MercadoLibre the Next Baidu?

Apparently, that is what Jim Cramer told Mad Money viewers Thursday. According to the recap, "by his calculations, Mercado (MELI) could go as high as $171 if it follows the same path as its predecessors." That would make the company worth a mighty $7.5 billion and eBay's 18.5% minority stake worth $1.4 billion.

While this is all pure speculation, it does highlight the emergence of Latam e-commerce and the importance of the market for eBay. As mentioned in a previous post, eBay still has important strategic decisions to make in Latin America (although it starts from a reasonable position).