UBID has a P/S of about 3, which, IMO, is grossly undervalued compared to
about 145 for EBAY. Holding this stock long is a no-brainer to me, especially now
that it has bottomed out and the Xmas season is just around the corner. Any good
news from now on will drive the price up and any major news like the deal with
Infoseek will certainly spike the price up.
Typical BS "analysis" of a "net" company.
If someone sells, say, a $1000 item on EBAY and EBAY gets, say, $70 fee, EBAY books $70 as its "sales" and not $1000.
If UBID sells, say, a $1000 item, UBID books $1000 as its "sales". UBID's average gross margin for 1998 was 8.2%. BTW, that gross margin is garbage.
You are comparing EBAY's revenue (more like "service revenues" than "sales") to UBID's sales revenue and concluding that UBID is undervalued. I don't have EBAY's service charge structure memorized, but it seems similar to UBID's gross margin (8.2%). If you want to compare, compare UBID's P/GM (price/gross margin) to EBAY's P/S. My rough calculations show that using your P/S figures, UBID's P/GM is about 36. Still below EBAY's, but EBAY has very significant barriers to entry (check out Jim Seymour's series at thestreet.com) while UBID has almost no barriers to entry. EBAY is also profitable right now while it's questionable whether UBID will *ever* be profitable.
I have no position in EBAY or UBID right now. EBAY will be around in five years -- guaranteed -- but is over-valued right now. There is absolutely no certainty that UBID, ONSL, EGGS, or any similar company will be around in five years.
I am actually hoping that UBID runs up more so I can short it again. |
