Don,
I am bullish on eBay, as I think it has one of the very best models on the Internet.
However, realize that even if you can get it at the IPO price, it still won't be cheap. At that price, eBay is valuing itself at around $600M. For a company with $5.7M in sales in 1997 and between $40M and $50M in 1998 (my projections), that is still expensive.
And if the market has settled down and eBay is a hot IPO, as I expect it will be, it could easily exceed $1B in valuation on its first day.
That kind of valuation is likely to get the attention of the likes of AOL, Yahoo and Microsoft.
Still, in comparison to most other Internet stocks, eBay is already profitable, and it could achieve $1B in annual fees and commissions in either 2000 or (more likely) 2001.
The best thing I like about eBay from an investment perspective is that we can see how well they are doing as well as the analysts. How? Because eBay lists their auction counts. From their auction counts, I (or you or anyone else who wants to spend a few minutes a week) can devise a formula that keeps track of their sales. We will know (within a few percentage points) what their quarterly revenues are going to be. Not only that, we can keep track of it on a weekly (or even daily) basis, if we want. That fact is going to really tee the analysts, because they are NOT going to get the information before the rest of us. (They will probably try to pressure eBay to stop publishing these numbers. eBay might stop publishing totals, which means we'll just have to work a little harder to compute them.)
So, it will be relatively easy to see if eBay sales growth is slowing down or accelerating, at ANY TIME DURING THE QUARTER. Now, THAT is investor empowerment! |
