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Technology Stocks : eBay - Superb Internet Business Model

EBAY 83.40

-0.6%

11:51 AM EST

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To: Jerry Miller who wrote (1921)	3/4/1999 9:06:00 PM
From: Kailash	Read Replies (2) of 7772

Well, we'll find out soon enough. Your optimism is certainly entertaining - especially since it's based on the assumption that we're in a unique and unprecedented situation. I don't think so; this is a bubble like many others - and at the top, there were always unbounded optimists like you. Your argument that eBay is different from RCA because the internet is not the only game in town is a weird one: wouldn't competition from other media be a negative? The rapid growth is also a negative, since earnings have to be projected all the further into the future. As for shorts being tight, this is a risky stock - but the risk is much higher for longs. Consider this comparison to the real world: Valuing eBay "eBay is one of the top Internet auction providers which first became famous as a medium to trade Beanie Babies during their mania. While many other Internet stocks have fallen off their parabolic pace, eBay has continued to power ahead. It is hard to believe but eBay began trading less than six months ago at 8 a share. On Wednesday, the stock closed at 123 1/4 for a new all time high and has now appreciated an astounding 1,444% since it was first offered to the public back in September. The incredible gain has given the stock a market capitalization of $14.9 billion. This mind numbing valuation is greater than four well known Dow industrial stocks. I thought it would be interesting to compare the fundamentals of the five stocks: Company Market Cap Employees 98 Sales Profits P/E ------------------- ---------- --------- -------- ------- ---- eBay $14.9b 160 $47m $1m 5880 Alcoa $14.2b 81,600 $15.4b $1.1b 16 International Paper $12.3b 82,000 $19.5b $386m 58 Goodyear Tire $7.4b 95,302 $12.6b $597m 10 Union Carbide $5.7b 11,813 $5.7b $516m 15 Although it is likely that eBay's revenues and profits will grow in the months and years ahead, is there really any way to justify its current valuation? Is it really worth nearly three times as much as a company that has revenues that are 100 times higher?" fiendbear.com (for 3/4). Kailash

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