eBay (NASDAQ:EBAY) takes advantage of online spending
Today's Financial News - Posted December 4, 2008
Online spending is making headlines. Plenty of cyber-retailers are seeing strong year-over-year gains even as the economy shrinks. Online offerings like Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) are doing extremely well. Which one should you buy?
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): During the Great Depression, financially devastated Americans sold turnips along side the road to make ends meet. Today, they merely boot up their computer and sell their junk online.
For proof, I called up an acquaintance that makes her living buying and selling on eBay (NASDAQ:EBAY). She answered the phone sounding like she had just spent the last 48 hours on a runaway treadmill. She was tired and grumpy.
“So how did Cyber Monday treat you,” I asked.
“It was insane. I have more orders than I can handle,” I think she replied. In her tired and mumbling tone, it was hard to know exactly what she said.
I do know she cursed and hung up on me when I told her to hang on to her hat with Green Monday and its huge shopping volumes on the way. Experts are predicting it will be the biggest online retailing day of the year.
Mr. And Mrs. Clause go online
While my auction-dealing friend was overworked and tired, I am sure she is glad for the surge in eBay spending. In all, online retail spending was up by 15% or so on Cyber Monday, the closely monitored first day back to work after the Thanksgiving holiday.
While online retailers like Amazon (NASDAQ:AMZN), Gap (NYSE:GPS) and Best Buy (NYSE:BBY) raked in their share of the $846 million spent last Monday, the Web’s largest auction site saw its selling activity soar. EBay reported a 50% year-over-year increase, thanks to its fixed-price sales surging by over 125% from last year.
When the nation’s economy locks its brakes, one of the first places discount shoppers and money-hungry sellers head is eBay. The site’s foundation is built on allowing individual sellers to unload their unwanted “junk” for cash.
As tens of thousands of Americans hit the unemployment line, they are turning to eBay for a shot at some quick and easy cash. Financially desperate sellers will unload just about anything they can live without in order to pay their winter heating bills, mortgages, and, of course, their burgeoning Christmas debt.
Some more discount buying
Wall Street has hammered eBay’s valuation over the past twelve months. A year ago, shares were trading for nearly $35. Today, the few folks savvy enough to buy are getting their shares for just $13.
Unlike so many other companies trading on the major exchanges, eBay does not have any desperate liquidity issues. It does not have to beg to creditors to extend debt maturities. It will not be diluting shares with a last-ditch attempt to increase capitalization. And most importantly, it is in a position to increase its market depth through strategic acquisitions and in-house development.
I know a lot of folks do not like the company’s management. eBay’s CEO, John Donahoe, has made some controversial decisions and certainly plenty of mistakes, but a company with a significant cash cushion and a near-total lack of debt cannot be overlooked by value-minded investors.
This is one of those plays where you have to put emotions aside and look at the reality of the economic situation and the numbers the company is producing. If a bank or manufacturer could post a balance sheet like eBay’s, investors would be drooling to get in on the action.
The worst is behind eBay and its future looks bright. Take a look at the stock and see if it fits your portfolio. I am positive you will like what you see.
Next Article: Time for Starbucks (NASDAQ:SBUX) to change its brand
7 Responses to “eBay (NASDAQ:EBAY) takes advantage of online spending”
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December 4th, 2008 at 1:49 pm
“When the nation’s economy locks its brakes, one of the first places discount shoppers and money-hungry sellers head is eBay. The site’s foundation is built on allowing individual sellers to unload their unwanted “junk” for cash.”
This is old Ebay ! The new Ebay is a junk filled, badly managed, terrible web site – clitched – pop ups – ads everywhere. In short it's trash. And no one even with a brain the size of a peanut would sell their items on Ebay and expect said items to make money .
December 4th, 2008 at 6:23 pm
Either you work for eBay or you're clueless. EBay does have a good cash reserve, but that's about it. And they won't have that for long if they keep paying a billion dollars for suspect companies like Bill Me Later. They have alienated sellers and buyers alike with endless policy changes and the unethical forcing of their Paypal payment service on everyone. Amazon is a much better investment than eBay. You should be telling your viewers to invest in them and not in a poorly run and self-destructive company like eBay. RUN away from eBay stock as fast as you can. They will soon be the next Enron, IMO.
December 5th, 2008 at 3:22 am
If eBay (i.e. management) had the brains to stay focused on person-to-person, one-of-a-kind sales like they became known for, rather than trying to remake themselves as a poor copy of Amazon, they would absolutely ROCK in this economy…. but they have been and are continuing to squander this “core” of who they are. They are no longer the best place to “get rid of your junk,” unfortunately. (Craigslist, Bonanzle, and eBid are). Their cash reserve is the only reason they are surviving.
December 5th, 2008 at 6:56 am
[...] eBay (NASDAQ:EBAY) takes advantage of online spending Online spending is making headlines. Plenty of cyber-retailers are seeing strong year-over-year gains even as the economy shrinks. Online offerings like Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) are doing extremely well. Which one should you buy? eBay (NASDAQ:EBAY) takes advantage of online spending [...]
December 5th, 2008 at 6:04 pm
Craigslist is the new ebay, sellers (ebays real customers) are rapidly jumping ship, especially with ebays fees now surpassing 15%. Ebays new changes morphed it into a generic retail site, not the vibrant marketplace that it once was. If it wasnt for Paypal in its pocket its stock would be on an even steeper downward spiral. As an eight year veteran I have seen nothing but biting the hand that feeds them, with too little too late fixes and lots of 24 year olds running amuck in thier org. The DSR system is a good idea for politicians and doctors, but I resent my customers be subjected to the annoyance of “leaving a rating” for every single item they purchase? When and why did the creators of the”electronic classified ad” become the referee for all transactions?
December 6th, 2008 at 8:14 pm
Just FYI, more of the real/full eBay story is here: http://tinyurl.com/6m6kkd (for context on both this article and the angry comments posted here)
December 7th, 2008 at 2:02 am
EBay stock pays no dividend and it's stock is down 30 bucks a share since last year. And their biggest competitor charges nothing for their service (Craigslist), while they charge 15% or more. Yup, that's a great company to invest it! LOL! And yes, I do know that eBay is trying to weasel their way onto Craigslist. But fortunately for all of us, the bigwigs at Craigslist have ethics, something eBay is sorely lacking. Their view on competitors is to either buy the company or ban them from eBay. I've seen enough of eBay's cutthroat and sleazy tactics to know they are a stock to avoid. The other poster was correct, they are going to be the next Enron. Their bigwigs will run away with golden parachutes, while eBay's common stock will become worthless. Shame on the “expert” who recommended eBay over Amazon. To quote Jim Cramer, “You know nothing”!