Saturday, February 07, 2009
Superbowl Commercial Stock Returns
Companies that advertised during the Superbowl last week... I knew this was ridiculous while compiling. I Guess I needed to satisfy that curiosity.
Sunday, January 04, 2009
EBAY
Thoughts on investing in EBAY stock:
First, Ebay has been a large growth company for some years. From 1998 through 2005 EBAY traded at anywhere between 1500 and 50x earnings, 33.8 in 06', 28.4 in '07 and now a meager 9.3x this year's expected $1.56 per share. We are three quarters into 2008 earnings and have tallied 1.17 per share in the first 3 quarters. We should be able to hit the required .397 in Q4. Such a figure would still be lower than Q's 2 and 3 and 2 pennies lower than last year.
This year, Ebay has a broader product offering including Skype, better integrated PayPal, Stub Hub and Bill me Later, among others.
These offerings, along with an ~ 35% increase in listings will have to offset the 10% decrease in YoY unique visitors to the auction site and a whopping 25% decrease in total traffic. This is the main problem - a fundamental issue relating to its operations, its appeal and its model in the future.
2008 was actually the first year that other auction sites finally were able to attract buyers. Some revolt among the old-guard of Ebay sellers vis a vis new policies on the Bay (new listing fee structure, new rules about shipping fees and new seller rating systems) and disenchantment with new CEO John Donahoe contributed to the fundamental ops problems as well.
A sum-of-parts valuation may imply Ebay is selling for about what it is worth - applying a 1B valuation to Skype, 7x Ebitda for the marketing business (growing at a 10% clip) and 8x for the payments business (growing at a 25% clip) leaves about 5x for the marketplace. (7 x 788 * 55% = 3.05B) + (8x 1836 *33% = 605M) + (5 x 4,838 *44% = 10.64B) + Skype = Total of 15.24B
Ebay has net cash of about 3.3B for an EV of (18,719-3,300) 15.4 B
I believe that while this may seem to be a compelling value in times of expanded multiples and risk taking, right now, with Ebay's main marketplace business growth slowing to a near halt, with fundamentals, in my opinion, impaired, I think Ebay is fully valued right here at 14.
First, Ebay has been a large growth company for some years. From 1998 through 2005 EBAY traded at anywhere between 1500 and 50x earnings, 33.8 in 06', 28.4 in '07 and now a meager 9.3x this year's expected $1.56 per share. We are three quarters into 2008 earnings and have tallied 1.17 per share in the first 3 quarters. We should be able to hit the required .397 in Q4. Such a figure would still be lower than Q's 2 and 3 and 2 pennies lower than last year.
This year, Ebay has a broader product offering including Skype, better integrated PayPal, Stub Hub and Bill me Later, among others.
These offerings, along with an ~ 35% increase in listings will have to offset the 10% decrease in YoY unique visitors to the auction site and a whopping 25% decrease in total traffic. This is the main problem - a fundamental issue relating to its operations, its appeal and its model in the future.
2008 was actually the first year that other auction sites finally were able to attract buyers. Some revolt among the old-guard of Ebay sellers vis a vis new policies on the Bay (new listing fee structure, new rules about shipping fees and new seller rating systems) and disenchantment with new CEO John Donahoe contributed to the fundamental ops problems as well.
A sum-of-parts valuation may imply Ebay is selling for about what it is worth - applying a 1B valuation to Skype, 7x Ebitda for the marketing business (growing at a 10% clip) and 8x for the payments business (growing at a 25% clip) leaves about 5x for the marketplace. (7 x 788 * 55% = 3.05B) + (8x 1836 *33% = 605M) + (5 x 4,838 *44% = 10.64B) + Skype = Total of 15.24B
Ebay has net cash of about 3.3B for an EV of (18,719-3,300) 15.4 B
I believe that while this may seem to be a compelling value in times of expanded multiples and risk taking, right now, with Ebay's main marketplace business growth slowing to a near halt, with fundamentals, in my opinion, impaired, I think Ebay is fully valued right here at 14.
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