eBay Has the Last Laugh at Analsyts' Expense

Isn't it ironic how every analyst who lambasted eBay (EBAY) for acquiring Skype for 3.1 billion dollars is associated with firms that lost billions and billions in the subprime crisis (i.e: Lehman (LEH), Merrill (MER), Citibank (C), etc). At least eBay still owns Skype and Skype is growing and contributing revenues while all of these other firms are up to their necks in billions of losses. Bank of America (BAC) invested in Countrywide (CFC) at $20 per share and is now buying Countrywide for $6 per share. How is that for an investment? Are we to trust these analysts on investment advice? Just think - if one of these analysts had asked their firms to stay away from subprime and buy Skype they would be lauded as geniuses on the Street today.

Additionally, to all those sellers who whined about eBay raising final value fees etc. - why don't you take some of the money you made from all of your sales on eBay and purchase eBay stock? It would have been a win win situation. These same sellers who whine about a nickel or dime increase are the same who are spending $5 for a cup of coffee, $7 for beer and $80 for dinner. What do these sellers do when their gym membership goes up by $50? Do they stop purchasing milk, orange juice etc?

eBay is growing on all fronts: Stumbleupon, Kijiji, Rent.com, Skype, Stubhub, etc. Of course listings are down on the auction site because many listing are now fixed price and disappear quickly.

If Yahoo (YHOO) believes it is worth $40 per share, then eBay is truly worth $80 per share

Disclosure: Author holds a long position in eBay

Comments

[jrkirk:]

As an Ebay seller, listing fees matter alot more than this writer thinks. (Yahoo has no listing fees.) The company has ignored their sellers for a very long time, and now that there are several more options for sellers, many will leave. I will stay, at least for now, because ebay is 'the marketplace' for things I sell, but if this changes, I will also change. Ebay has done what is best for itself without regard to it's sellers, and now sellers are going to do what is best for them. Isn't that how a market works? I have been short ebay in the past several times, and I would not be buying the stock here. IMHO
JK

2008 Feb 15 08:06 AM

[SPL:]

As someone who is familiar with multiple e-commerce channels, you are going to look at anywhere from 10-20% for listing, final value, processing and marketing fees. Say your average fee on eBay is 8% (insertion and final value) and your payment processing is another 2%, you are looking at 10%. If you run your own website, you probably pay 3% for the final value plus a monthly fee for the cart and web hosting not to mention you might need the services of a web designer or IT person plus processing costs. Don't forget that a business needs to advertise their site to drive enough traffic to sell enough items to make the business profitable. Most companies set aside about 10% for an ad budget so you are looking at 15% just with expenses not including one time or recurring expenses to sell on your own website. I've heard that Amazon charges approximately 15% (selling and processing fees combined) plus, I don't know if they advertise their inventory as actively as eBay does. As long as buyers keep coming to eBay, a merchant should consider eBay as a sales channel in my opinion.

2008 Feb 15 02:47 PM