Don't Mean to Yell, But...EBAY is SCREAMINGLY CHEAP
Look, we realize that eBay has been a dog and that you traders can't sit around waiting years for companies to get their acts together. But I mean my goodness this stock is cheap.
News Flash: eBay is not a newspaper company. It's not a car company, a paint company, or a cable company. So why is it trading like one?
eBay generated $2.2 billion of free cash flow in 2007. Excluding cash, the stock is now trading at 15X trailing free cash flow. 15X! For a global ecommerce leader with:
People, Time Warner trades at about 20X trailing free cash flow. Time Warner! A business is such desperate straits that if we were Jeff Bewkes, we would spin off AOL and then spend the rest of the year hiding under our desks. Do you really believe that Time Warner has a lot more growth in its future than eBay?
All eBay has to do to get itself going again is:
Disclosure: Yes, yes, Henry Blodget owns eBay. But he has been peeing on it and Meg Whitman all the way down, and he'd make the same argument now regardless.
eBay 2008 Outlook: Short-term Pain = Long-Term Gain
Interview with New CEO, John Donahoe
Interview with John Donahoe
More on Fee Change:
Potential eBay Fee Change Has Experts Worried
Fixing eBay: Our Four-Step Plan
Seller Anger:
eBay Users Vent Rage to New York Times
Overall Strategy:
eBay's Real Problem: A World of "Auctions" and "Stores"
Change Needed at Top:
eBay: Time For CEO Meg Whitman to Go?
News Flash: eBay is not a newspaper company. It's not a car company, a paint company, or a cable company. So why is it trading like one?
eBay generated $2.2 billion of free cash flow in 2007. Excluding cash, the stock is now trading at 15X trailing free cash flow. 15X! For a global ecommerce leader with:
- a hyper-capital-efficient business,
- strong network effects and barrier to entry,
- a new CEO who seems to get it
- ultra-conservative guidance
People, Time Warner trades at about 20X trailing free cash flow. Time Warner! A business is such desperate straits that if we were Jeff Bewkes, we would spin off AOL and then spend the rest of the year hiding under our desks. Do you really believe that Time Warner has a lot more growth in its future than eBay?
All eBay has to do to get itself going again is:
- Sell Skype
- Fix the interface
- Cut prices
Disclosure: Yes, yes, Henry Blodget owns eBay. But he has been peeing on it and Meg Whitman all the way down, and he'd make the same argument now regardless.
eBay 2008 Outlook: Short-term Pain = Long-Term Gain
Interview with New CEO, John Donahoe
Interview with John Donahoe
More on Fee Change:
Potential eBay Fee Change Has Experts Worried
Fixing eBay: Our Four-Step Plan
Seller Anger:
eBay Users Vent Rage to New York Times
Overall Strategy:
eBay's Real Problem: A World of "Auctions" and "Stores"
Change Needed at Top:
eBay: Time For CEO Meg Whitman to Go?
This is why ebay is tanking:
You can not go by the listing count.
The seller BUY or Buy.com was taken on by ebay, right at the time ebay KNEW they were going to lose sellers. They are using buy.com, to pad the listings, to make it look like the count is up, when it really isn't. We have found thousands upon thousands of fake listings, that have no description and you can't even bid on them. I personally found them ending tens of thousands of listings early, saying they are no longer available for sale and then immediately relisting them. Most likely to keep the sell through rate up, which was dwindling and then relisting them again, to up the listing count 2 fold. Buy.com, doesn't pay listing fees, so these millions of listings, are not bringing in revenue. Their sell through rate is around 5%, when I last heard, so the listings themselves aren't bringing in much either.
If Buy.com's millions of listings were removed from the count, it would be millions less and shareholders would be wondering what is going on. They wouldn't have to do much searching because the word is finally getting out. Isn't this making the stockholders think that listings are up, when they really aren't? We have all the proof documented. I even have it documented of when I was talking to Ebay Live Help and asking them about all the ads, being ended early and it immediately stopped, when they found out that we knew about it.
We just feel that shareholders, should know what's going on and ebay is doing their best, to hide it. We can see what the funds are losing, by going to the following link and just think it is awful, the amounts of money people are losing. We understand a lot of funds are holding on, hoping it will go back up with the new changes, but we don't see it getting better and just feel that you have a right, to know.
You'll be like all these funds, who have lost hundreds of millions and then with the 60 million that they have now been slapped with, it's not looking good!
http://www.mffais.com/ebay.html
Ebay is causing sellers to leave in droves, with the new policy changes and tens of thousands of sellers and buyers are irate. The recent changes are just plain idiotic. Sellers can no longer leave negative or neutral feedback, even if a buyer bids, wins your item, ignores your emails and doesn't pay. What right do they have to leave any feedback, if no transaction has even taken place? We have sellers, bidding on competitors items and ruining their feedback, just to get a boost, on their own items.
Ebay also went in and retroactively turned all neutrals, into negatives, based on a assumption. Neutral, means just that. How can ebay change the meaning of a word, to mean something else? They started giving new discounts to people with good ratings, but they knock them down first, with the neutral change, so that many can't even meet the requirements, for the discount.
This is not the worst of it. We have thousands and thousands of sellers, who have closed their stores and we KNOW that the listing count should be going down. But, we have uncovered the source of the raised listing counts and this is how ebay is throwing off the boycott, so investors don't hear the "Noise" as John Donahoe call it. I can't see it being anything, but fraud.
AND I DO MEAN TO YELL, GET OUT WHILE THE GETTINS GOOD
You forgot to mention paypal, stubhub, shopping.com, growth in Kijiji etc
You forgot to mention paypal, stubhub, shopping.com, growth in Kijiji etc
You forgot to mention paypal, stubhub, shopping.com, growth in Kijiji etc
On the concern that others will believe Fred, we don't delete comments unless they are obscene or absurdly offensive. And for six months, I have been saying precisely the opposite about Google--that it would NOT be immune to a recession.
A tiger has trouble changing his spots. Blodget was banned from the securities market precisely for the same reason - saying one thing and doing another. Who knows what he is upto now.
So-called "analysts" are a bunch of frauds.
It's different from "net income"--which earnings per share is calculated from--because it captures changes in cash over a given period instead of the "revenue", expenses, and non-cash items such as depreciation/amortization, etc., that are reported on the income statement. ("Revenue" should eventually result in cash flowing into the business, but only after the invoice is paid)
Free cash flow is the metric you would care about if you owned the business: "After I paid all the bills, I was left with $5". The reason "earnings" can be misleading is that they contain non-cash items that may give a skewed picture of the cash-generating power of the business. So if you want the clearest possible picture of a business's value, look at free cash flow.
(In defense of "earnings", it's usually a better valuation metric than EBITDA--Earnings Before Interest, Taxes, Depreciation, and Amortization--which is effectively earnings before lots of expenses.
Cable companies love EBITDA because it helps them obscure how much cash they have to shovel into infrastructure to keep the business running. If you own a cable company, though, you'll only get to take home a fraction of that EBITDA, because they rest will go into the ground.)
Henry said ....."he has been peeing on it..all the way down"
Great line!
Good post. It's probably also good that I know what free cash flow means, but, 99 of 100 of your readers have no clue what that means. You should explain it to them, Hank.
So if a new competitor were to enter into this market they would have skype to deal with, they would obviously create a streamlined interface for the buyers and sellers, and, make it free to list and only charge extra for emphasizing your listing.
I bought ebay LONG ago, and sold in Dec at about 33. I also used ebay in the first year it was in production and loved it, but it's been sucking lately due to its preference to business's vs. consumers and their garage sales.
Yesterday you talked about how crappy of an investment Google was a few scant months after you preached that Goog was destined to hit $2,000 a share, a genius move.
Today, you're wondering why eBay is trading so low on the heels of yesterday's article about your readers being stupid because they thought (on your advice) that Google was recession proof. Is eBay suddenly recession proof?
Or are you suddenly a moron?