Oh here was the full report from Holly Becker of Lehman Brothers for Ebay:
Lehman Brothers analyst Holly Becker triggered Monday's downturn by lowering her
rating on eBay's shares from a "buy" to a "neutral" after concluding the San
Jose-based company's collectibles business has peaked.
Skeptical that eBay will be successful in its effort to list mass merchandise
items, Becker said she did not believe the company will be able to sustain the
growth needed to deliver on management's promise for $3 billion in annual
revenues in 2005.
EBay's revenue this year is expected to range between $400 million and $450
million. One of the world's few profitable online businesses, eBay make its
money by charging listing fees and commissions on auction sales on its site.
Becker's bearish remarks rattled investors accustomed to seeing eBay's revenues
double from one quarter to the next as more people sell goods on the site.
EBay's shares dropped $8.94 on the Nasdaq Stock Market on Monday to close at
$34.50.
After the market closed, eBay management reiterated the company's belief that it
will reach $3 billion in revenue in 2005.
"We did a lot of homework before putting out that number. We still see a very
robust business for us," said Rajib Dutta, eBay's vice-president of finance.
But investors are worried most of eBay's users are only interested in buying and
selling trendy collectible products, such as Beanie babies.
Ebay expects collectibles sales to account for just 15 per cent of its projected
$3 billion in revenue in 2005. The company said its site already accounts for
the most online sales of toys, sports equipment and jewelry. EBay is
aggressively branching into other big-ticket items such as automobiles and real
estate.
ABN Amro analyst Kevin Silverman said he believes eBay's sales projections are
realistic. He expects total sales of used consumer goods across the United
States to hit $517 billion in 2005. If eBay's site handles about nine per cent
of that volume, Silverman estimates eBay's 2005 revenues will be $3.7 billion.
Silverman and other analysts characterized the Monday meltdown in eBay's stock
as a knee-jerk reaction by investors behaving as irrationally now as they did
when they assigned mind-boggling market values to e-commerce stocks.
As recently as March, eBay's shares traded at $125, giving the company a market
value of about $35 billion. The company's market value is now below $10 billion.
* Note stock was later defended by PRUS who maintained a strong "buy" rating on EBAY with target of $125 saying sell-off was unwarranted .
Chart:
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