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Why is Ebay going down in 2006? And… why am I buying it now? May 18, 2006

Posted by deminvest in Blogroll, ebay, growth stock, investment, Single stocks, stock I own, stocks.
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Ebay is going down because for the first time since it went public there is a minus in its year to year comparisons statistics. During last quarter Ebay's earnings went down.

On yahoo finance you can read: Qtrly Earnings Growth (yoy):-3.10% related to Ebay. This was considered inconceivable for a company that grew revenue and earnings double digit every quarter for the last 5 years. EBay’s stock price fell down, so I buy. I do buy mainly because EBAY is now a reasonably priced growth stock which showed Qtrly Revenue Growth (yoy): 34.80%.

A company like Ebay which has growing revenue will not have problems in making earnings grow the same amount. It is basically a company that can decide to have virtually no expenses anytime. They can decide to do nothing and see autonomous customers do everything for them, uploading product descriptions, organizing auctions, bidding, sending receiving… All that without human intervention by EBAY staff.

If EBAY spends, it does so to grow, which is good from my stockowner's point of view.

EBAY has Paypal, which is an amazing money making machine and is becoming more and more Internet Payment system. Google pay's menace is like a sword hanging over the head of Paypal, but it is

EBAY also has Skype, which is an amazingly successful money eating machine. Ebay's Internet-based phone service now boasts more than 100 million users. The unit's scale of business is truly impressive, with more than 500,000 downloads every day. After only three years of activity Skype accounts for 7% of all international long-distance phone call minutes. Will Ebay make money out of Skype? Probably yes, once it has defeated its competition, by pouring money into it.

So I am buying Ebay in the next… 50 seconds. Let's hope it will not disappoint me.

Comments»

1. blogtroll - September 16, 2006

Too many ebay buyers are yard sale shoppers. Even if the item is new they want it at ‘throw away’ prices.
The ebay store killed the auction and made it a Kmart or Walmart experience. Why bid if you can get it cheap on a buy it now!
For me there has been a steady decline since 9-11, prior to that, this was full time for me.
Heaven help us, ebay will only help themselves!


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