Liren, if you had read the prior posts, you would see that we are all in agreement with you about the differences between uBid and eBay. In fact, one of the complaints of both longs and shorts is that the two stocks have tended (except for yesterday) to track each other despite the fact that their business models are entirely different. Please read these posts before suggesting that others are wrong so that you have an understanding of what is being discussed.
Your analysis is somewhat simplistic about both, however. Your view that eBay has the larger user base and hence will be more profitable demonstrates a poor understanding of what eBay does. They are a garage sale, taking a cut from each transaction as their means of revenue. Their revenue stream depends on the sale of huge amounts of cheap and tawdry merchandise, taking pennies from each. As with garage sales today, the quality, variety and value of each transaction is wholly outside their control. Similarly, so is customer satisfaction, which is why they have been plagued with fraud problems. The phenomen only lasts as long as there is a sufficient quantity of marketable merchandise of sufficient value to generate a revenue stream, and a sufficient number of buyers who will risk buying sight unseen the flotsom and jetsom of other people's used throwaways.
Just as garage sales had their place for a while, so too does eBay. But whether they can keep this stream going, or the interest of buyers which has severely waned in the garage sale phenomen, is another matter and one which the company cannot control. If the co. can't control its product, customer satisfaction or price point, then is can't control its revenue stream. Co's that have no control over revenue stream are dependent on luck. This, in my view, is not a viable business model over the long term.
SHG |
