Poor eBay: Profits only up 43%, stock slides 12%
Manorcourtman
Posts: 8,024 ✭✭✭✭✭
On front page of today's IBD: "Ebay's charmed life finally takes break with weak quarter." After hours shares were down 12%. Poor eBay only saw pro forma per-share earnings up 38% from a year ago and net profit only rose 43%. I guess our coin selling fees aren't high enough yet to help them sustain 50%+ growth every quarter. I smell a second fee increase in late 2005.
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IBD also noted Amazon and Yahoo challenges have largely failed. The coin market is so ripe for an affordable site that the small to mid-sized dealer or so-called dealer can operate on with the relative ease one finds with eBay.
<< <i>Certainly makes Yahoo Auctions look more tempting. >>
I tried signing up for Yahoo auctions. It is nowhere near as easy
to use as ebay. I haven't tried the others.
Please check out my eBay auctions!
My WLH Short Set Registry Collection
--Severian the Lame
Fear the power of any company which has the power to raise prices almost at will without too much fear of losing business to competition. Hopefully, this is the one that rocks the apple cart and forces them to fit into their britches again.
We need more coin dealers and coin trades on OVERSTOCK and other venues. I will not be buying from Ebay anymore.
My prediction: Ebay is not going away. Ebay will be back in the low $100's by the end of the year. The sellers will be there, the buyers will be there, and the earnings will be back on track. One year from now, this sell-off will be looked at as a great opportunity to get into a great franchise at a reasonable entry point.
Disclosure: No position curently.
Knowledge is the enemy of fear
"Meg Whitman, EBay president and chief executive, said Wednesday the company expects to report 2005 sales between $4.25 billion and $4.35 billion, including $1.01 billion to $1.03 billion in the first quarter.
That's below the lofty expectations of Wall Street, where a survey of 22 analysts by financial research firm Thomson First Call predicted eBay would report 2005 sales of roughly $4.37 billion, including $1.05 billion in the first quarter. "
Guys, this is not a huge miss. $4.30 billion in sales vs. $4.35. Often companies will lower expectations so that they can exceed them and look better to Wall Street. I have not dissected the numbers any further, but this looks like a buying opportunity to me.
R
<< <i>Ebay is down 16% today. I sold out of my small position last week.
My prediction: Ebay is not going away. Ebay will be back in the low $100's by the end of the year. The sellers will be there, the buyers will be there, and the earnings will be back on track. One year from now, this sell-off will be looked at as a great opportunity to get into a great franchise at a reasonable entry point.
Disclosure: No position curently. >>
EBAY cannot and will not continue to trade at 80x earnings, 9x book value, and 23x sales. NO way NO how!!!
Sticky this prediction--------You have seen the highs on Ebay stock for the forseeable future. And I can see a long way.
Knowledge is the enemy of fear
<< <i>Guys, this is not a huge miss. $4.30 billion in sales vs. $4.35. Often companies will lower expectations so that they can exceed them and look better to Wall Street. I have not dissected the numbers any further, but this looks like a buying opportunity to me. >>
Yes, it is a very small miss and a typical Wall Street overreaction.
Having said that, the market has not been good so far this year, and there has definitely been no "January effect." The market is pretty much looking for any reason to sell off right now.
This is one of the reasons I like Berkshire Hathaway. Warren Buffett aside, they don't play those silly games with analysts or use long-term suboptimal strategies just to meet this quarter's numbers -- because they don't give estimates. I'm sure there are a lot of companies which shot themselves in the foot long-term just to hit their targets this quarter. Getting that last ten cents of earnings this quarter may cost them thirty cents in the next fiscal year. But the short-term stock-flippers and Wall Street types don't care about next year.
[Edit to add: Keep in mind also that a stock like EBAY was priced to near-perfection and with expectations that they'd keep blowing away estimates. That made the reaction to this miss -- small as it was -- as violent as it has become.]
The major factor causing the Bear market is Faked Earnings. Excuse me - "accounting irregularities."
Companies fake Earnings high, and fake Estimates low. When a stock actually misses in real life, it should lose 15+% in an instant.
And it will lose more when the Leveraged investors wake up tomorrow to margin calls....
Billy
MY prediction: Yahoo and Google have the resources to "mine" eBay for users .....and will.
eBay has the "eyes" for now. That can change rapidly if large players decide to go after the business with good consultants who have collectibles experience and can guide the format.
eBay has had a good run. Their business model is too good to overlook for long. The costs of their business are minimal as "storage" is very very cheap nowadays.
Give another large Inet player an incentive to reap the sale commissions and if they have OTHER sources of income (banner ads, placement fees, etc) they can afford to develop superior sites.
(maybe e-BOMbay)....heh
eBay's huge fee increase for "stores" was stupidity in the extreme.
There are a lot of people with those kind of bucks. Prices for the top and rarest coins will always be supported by people like this.
Knowledge is the enemy of fear
About "accounting irregularities", I think it is just as misleading to understate projected earnings as it is to overstate them. A company has to “beat the street” for a reason or else they will be pegged by traders for “creating news.”
Shareholders only care about fee increases affecting eBay’s profit, not the sellers. If a percentage of sellers go away, that loss may be made up for by the fee increase. It might turn out to be a good thing. A big complaint about eBay is that it has become a retail venue. A person who has bought 5,000 glow sticks or 50,000 cell phone antenna stickers might not try and sell on eBay; while a person trying to clean out their garage things he’s found a better deal than the classified adds.
Overstock.com?
A ghost town... really, lets be serious... go check it out. How about posting some of your great buys or sells over there.
Amazon?
Please - I just checked their site. Sad. They have 817 listings in the US Half Dollar category. Their listings have three bidders. Not 300. Not 30. 3.
Of course, that is better that their U.S. Cent category. 683 listings - number of bidders? Zero.
US Dollar category? 1,327 listings, 9 bidders (almost double digits).
Sorry guys, but I see a trend here...am I biased as an eBay shareholder? Certainly. But I'm also a realist.
Dave
<< <i>Overstock.com? >>
Please... Ebay started out selling Beanie babies......and it was a ghost town too once.... Nothing in this world is permanent.
Sellers need to move to Overstock...Amazon, too much fraud on Ebay, I guess the sellers will just keep listing and paying Ebay when there are no buyers, they will move to other venues.
<< <i>Please... Ebay started out selling Beanie babies. >>
Pez dispensers, actually.
<< <i>Sellers need to move to Overstock...Amazon, too much fraud on Ebay. >>
What a silly thing to say. The fraudsters will go where the people are. If by some miracle Overstock overtakes eBay in volume, you will see just as much fraud there as there is today on eBay.
Overstock.com? Amazon? How about posting some of your great buys or sells over there.
I'm waiting....still waiting......
Dave
<< <i>Overstock.com? Amazon? How about posting some of your great buys or sells over there. >>
I've scored one coin in my life off of amazon -- a (1993) $5 WW2 commem. Not a particularly hard to find item.
The nice thing about amazon is that the payment processing all goes through amazon's system -- so if you have an account already there, you're all set up.
Dennis
EBAY = Bloated Pig Deflating
There is good support at the 73 area. I am just looking for a quick bounce in the next week. Possibly as high as 85, although I will be out way before then.
Knowledge is the enemy of fear
I tried an experiment a few times. I listed same items on both eBay and Yahoo! Auctions, copied the descriptions, same pics, same starting times and prices, same ending times, and tried different days. sometimes the final price was slightly higher on eBay. Sometimes on Yahoo! Auctions.
I read a recent Morgan Stanley report stating they think eBay could do well. Basically their argument suggests PayPal can take a larger percentage of non-auction Internet payments. It convinced me and I will buy some EBAY shares if they get to $60 or below this coming summer.
Amazon is even more of a ghost town.
Try listing an item with No Reserve at any of the other auction sites… and then report back (I've tried it twice - OUCH!)
Dave
Knowledge is the enemy of fear
Nice move.
Now that the leveraged Long investors have been blasted for 30%+, it's a new ballgame.
Who knows, next quarter they may fake the earnings high again!