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Kevin about Bidz.com (BIDZ). Is it a bargain? December 7, 2007

Posted by deminvest in BIDZ, ebay, growth stock, Internet stocks, investment, nasdaq, Nasdaq stock, stocks.
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Want to buy a diamond ring online?

 

Kevin’s comment about Online Jewelry Auctions BIDZ.com, on a previous Ebay post , is so interesting that it deserves the attention of main page:

“Have you seen what has happened to BIDZ in the last week? It was at a high of $22.50 and plunged after a report came out (from someone shorting the stock) about how bad the business was. It is now at $10.19. When I first looked at the price I thought it was steep and then did some research on the company. I bought a few items. No diamond ring from them. They could do some work getting better quality diamonds. I did buy some earrings and a bracelet for a relative for Christmas and was impressed with the quality.

I think this is a good buy price. I would expect a rise after they post their 4th quarter income statements. They have already been posting sales records this shopping season and I don’t see any reason why it would stop.”

Comments»

1. deminvest - December 7, 2007

Kevin, do you think buying at BIDZ is better than buying at Ebay? If yes, why?

I noticed that BIDZ was priced around $8 in August-September 2007. So $10 may not be a total bargain if there was some truth in Citron’s report.

Data about BIDZ that I can find on yahoo finanace is still extremely interesting:

Trailing P/E: 23.25
Forward P/E: 20.06

are quite similar to EBAY’s, but

Qtrly Revenue Growth (yoy): 48.00%
Qtrly Earnings Growth (yoy): 257.40%

is a bit better than Ebay’s 30% revenue growth.

The main point it that I don’t understand why buyers and seller prefer BIDZ over Ebay. I also noticed something quite interesting: Bidz accepts Paypal (belonging to Ebay) as a payment system. I find strange that they should let they main competitor earn on their sales.

I am tempted to buy BIDZ, but I’m a bit scared.

I am also very interested in auction site mercadolibre.com (MELI) which is really booming. If I compare BIDZ.com with meracdolibre.com page veiw growth over the years… What I see makes me want to buy MELI… too bad MELI is so horribly expensive: Trailing P/E: 238.21, forward P/E: 81.17.

2. Kevin - December 7, 2007

I invest differently than you as I don’t sell once it hits 40%, but I do think BIDZ would be a good buy for that strategy. I do like EBAY, but with any large company growth is going to be difficult. I personally never fully enjoyed buying things on EBAY. I”ve been ripped off a few times and the auctions are dull. You place your maximum bid and later you get an email if you won or have been outbid. I find it hard to navigate the page, and have difficulty finding things I want.

BIDZ it is different. I actually enjoyed buying an item. They are focused so you don’t have to ignore all the bad search items when you look through listings. Their site is easy to navigate. It is hard to describe the bidding process but it is ongoing. The bidding does not stop until no one bids for more than 15 seconds at the end.

They are profitable and their income is increasing at a faster rate than their expenses.

I do think it is risky but I like having risk in my portfolio. They need to do more marketing and get more visitors to their site. They also need to stay away from debt.

I substantially increased my position this morning by buying at $9.83. It is a hold at least until their next quarterly report. The way they’ve grown in the past and having 25% of their sales come from outside the US I think they will have a good Christmas. People in the USA have been saying they are going to spend less this season. They will search out the best buy and many might be directed to bidz.com.

3. deminvest - December 7, 2007

What the heck Kevin! I bought them ( commission free with zecco of course):
Date of Order 12/07/2007
Order Status Executed
Time of Order 1:05 PM
Executed Size 100
Executed Price 10.08
Details Buy BIDZ 100 Shares
Total amount $1008

I must admit I’m not very convinced, It is mainly the hope they’ll swing back around the $15, so I can get out before any drama takes place.

4. Kevin - December 7, 2007

The fundamentals of the company seem good. They have consistently made a profit. They do have challenges ahead of them, but if they can overcome them they (and we) can make a lot of money.

I noticed your posts on Google Finance. Good commentary.

5. Andrew - December 7, 2007

hehe… So you guys jumped into the wagon. I was planning to do it since my last post in ebay, just waiting for zecco to approve my account!

I still believe there’s more opportunities to make money from Bidz. Market cap is just 244 million, compared to ebay’s monster 46B. Much easier for Bidz to double it.

But these are the things that discourages me from following pure fundamentals. The company looks healthy, good projections, new markets, etc, etc.. but a simple report can make people sell so quick, making the stock plunge. The question is, would technical analysis have thrown me a sell signal?

Anyway, I’m fairly sure the stock will recover. “Let the force be with you guys”🙂

6. deminvest - December 8, 2007

Yea Andrew: let the force be with us!

I think we’ll need it this time. I don’t feel very safe with BIDZ. Honestly I’m in to get out as fast as I can as I hit my 40% up target. Actually this is what I always do🙂

PS
You should thank zecco guys for taking their time. Now you can buy twice as many shares with the same money!

7. daily - December 11, 2007

Stumbled upon your blog a week ago and decided to come back. Not for the articles you write, but for how you write them, really amazing stuff you’re doing here, i like how you put information into the articles which makes it much more easier to read and much more interesting of course. Keep up the good work!

8. Andrew - January 8, 2008

Do you know when BIDZ is reporting earnings? Anywhere where I can find exact dates for the I’m following? -cheers

9. Andrew - January 8, 2008

I meant to say.. anywhere where i can find exact dates for the _companies_ I’m following?

10. deminvest - January 9, 2008

this is what you may use:

http://biz.yahoo.com/research/earncal/today.html

but BIDZ is not there. They have not yet communicated the date of their Earnings Announcements.

Should be around 12 February, because the announced their 3Q earnings on November 12

11. Kevin - January 14, 2008

Bidz.com AmTech Research initiates Buy. Target $19. Amtech initiates BIDZ with a Buy and a 419 tgt saying that BIDZ’s combination of rapid top-line growth and fixed-cost leverage warrants a premium multiple. In addition, robust traffic growth appears poised to keep BIDZ’ top-line humming. The firm says the margin expansion that they are estimating is being driven almost entirely by the tremendous fixed-cost leverage latent in the model: management believes that their current infrastructure/headcount can support a business 2x to 3x the size.

Source http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=BCOM&date=20080114&id=8034186

12. deminvest - January 14, 2008

Kevin, thanks for posting some good news about BIDZ!
I needed it badly🙂
We’ll have to wait February to see it reach that target, if earnings are as we all hope…

Still I am a bit scared because I have no clue where those people from Moneycentral got their data about “robust traffic growth”. I hope they got if from some independent source, because what I see on Alexa (which is independent) is not nice at all:

http://www.alexa.com/data/details/traffic_details/bidz.com?site0=bidz.com&site1=mercadolibre.com&y=r&z=3&h=300&w=610&range=6m&size=Medium

13. Andrew - January 14, 2008
14. Carmen Serracino-Inglott - March 19, 2008

Hi Kevin,

I have been bidding with bidz.com all afternoon. After getting 2 bids they tell me that Malta is not included in their mailing list when the whole world is. I wanted to pay by Paypal or Visa and then bang all of a sudden they told me that they won’t send to Malta. Can you sort this out for me. Bidz is fun. If you know of a similar company which accepts Malta please inform me.
Thanking you,

C. Serracino-Inglott

15. Matthew Mills - March 21, 2008

Ladies and Gentlemen,

As most you know, I am the former Chief Operation Officer of Bidz. I have maintained a very close relationship with a great number of the original shareholders of Bidz and still hold a sizeable stock position in the company. Over the last couple of days I have been meeting with a number of large investors of Bidz. These investors are very well known in the investment community, connected to big name law firms coast to coast and have political ties in Washington DC.

All of us long shareholders believe that what we have experienced recently is a well organized illegal short attack on Bidz. After numerous discussions, we have decided that it is time to take these matters into our own hands. We now intend to combat these seemingly illegal activities through our legal system. The attorney’s that will represent myself and other shareholders are confident they can file actions against the persons and/or entities involved. In addition, we will be working on getting the right people in the right places to listen to us. If the shareholders work together in providing the necessary proof it will strengthen our cause.

The first step will be to file lawsuits against certain individuals and/or entities who have been involved in the publishing and disseminating negative information as part of the scheme to illegally manipulate Bidz stock.

Another course of action will be to go after the firms involved with improperly trading the stock. Part of this phase will be to gather information regarding shareholder holdings so as to determine amounts of the company’s actual float and available shares. We are very confident that if we get all of the sizable shareholders together and prove our holdings against the current float, we will be able to assist in revealing counterfeit shares for which a number of brokerage houses are responsible.

I have volunteered to round up the troops and start gathering information to try to put a stop to this unlawful action once and for all. Justice and a level playing field will be ours.

If you are a Bidz shareholder and would like to help this cause it’s important that we get together one on one and discuss our plan of attack.

My contact information is as follows; matthewmills21@yahoo.com

I will start my follow up next week, all information that is gathered will remain confidential.

Thank you for your help!

Matthew Mills
Bidz Shareholder

16. Kevin - May 6, 2008

BIDZ seems to beak analyst expectations today. They had a EPS of $0.18.

17. deminvest - May 6, 2008

Yep, but it looks like revenue was boosted by “wholesale sales” that are outside of usual business model. Excluding that, revenue seems to have fallen below expectations, so, unfortunately, BIDZ is trading -3% in the after hour

18. Kevin - May 7, 2008

I like how they are going to put the website out in Spanish.

19. deminvest - May 7, 2008

But I don’t like what is happening to BIDZ stock price.

It seems that investors worry about the fact that Bidz had to sell part of its inventory wholesale… They fear that it may have been sold wholesale, because BIDZ was afraid not to be able to sell it through the website.

Doesn’t make much sense to me. We will see later on.

20. Kevin - May 19, 2008

Did you sell? Your 30% sell price has arrived. It is 13.02 right now.

21. deminvest - May 19, 2008

Not yet Kevin. In April 2007 I slightly changed my “free stocks strategy”, setting target to 40% up for every stock.

So I need a little further effort by BIDZ🙂

22. Kevin - May 19, 2008

Well, it is not too far away from your 40% price target now. I was up over 50% so I sold my shares. My average buying amount was about $9.00 and I sold at $13.55.

I have no clue why it is rallying like this for the last few days.

23. deminvest - May 19, 2008

Kevin, in my opinion investors don’t trust very much Bidz.

Latest results were very good, but investors were afraid that BIDZ managers had sold jewels wholesale because they did not expect to be able to sell them on-line.

Yesterday BIDZ bought $27 Millon worth of Jewlery at a bankruptcy auction. Investors are now more confident that BIDZ managers expect to be able to sell that jewlery through the Internet.

Kevin, did you sell all your BIDZ shares, or did you keep some?

24. Kevin - May 19, 2008

I sold all of my shares. If it goes below my target price of $10 again then I may buy some more.

25. Andrew - July 28, 2008

There you go, Kevin, down almost 7% today, $9.51. Unbelievable.

26. deminvest - July 29, 2008

I hope it is not a leaking of bad second quarter earnings news due for August 5.

27. I reinforced BIDZ throwing some spare change on that looser « Democratic Investments by the people for the people - November 21, 2009

[…] BIDZ lost 75% Since I bought 100 shares for $ 1008. […]


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