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Technology Stocks : eBay - Superb Internet Business Model -- Ignore unavailable to you. Want to Upgrade?

To: Doug Fowler who wrote (4228)	7/25/1999 2:17:00 PM
From: Charlie Schultz	Respond to of 7772

Has anyone seen the eWanted.com site ? charlie

To: Doug Fowler who wrote (4228)	7/25/1999 6:23:00 PM
From: JF2155	Read Replies (1) \| Respond to of 7772

Come on everybody give us your hard # predictions -40 % growth vs 70 % last qtr . JIM

To: Doug Fowler who wrote (4228)	7/25/1999 6:29:00 PM
From: Robert Rose	Respond to of 7772

Doug, we are in much agreement. However, consider this: <I would argue that the P/S sales ratio based on a conservative forecast of $200M for 1999 would be 68 (based on today's stock price).> Fine. But that's forward-looking and assuming a flat stock price through 1999. By contrast, CSCO sports a current p/s of 20, and MSFT sports a current p/s of 26. If we assume that Wall Street is beginning to value the inets by more traditional metrics (evidenced by the dot's 29% decline since April), ebay remains wildly overvalued. <As far as earnings, I have no doubt that at any time eBay WANTS to do so, they can show after tax profits of 25 percent of revenues.> Nice, but lots of companies are that profitable, and they trade at much lower pe's and p/s'. To warrant its current valuation, ebay must execute flawlessly on all cylinders, particularly customer experience and revenue growth. Recent past shows the former sadly lacking; tomorrow's e report will show revenues underwhelming. <Applying that to $200M for 1999, we would get $50M in profit, for a P/E of 270. < (Now, I know eBay is not going to show $50M in profit this year because they should be spending more of that money to build the infrastructure and attract new business. However, with gross margins around 85 percent, the 25 percent after tax margins are reasonable, once eBay gets to the right point.)> This assumes execution on par with competitors such as amzn. Given recent history, fat chance. < I do agree that the immediate future for the stock is questionable, and I can see eBay falling below 100 in the next few weeks. > Tuesday will not be pretty for ebay.