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

To: JF2155 who wrote (849)	11/21/1998 9:39:00 PM
From: James Overko	Read Replies (1) \| Respond to of 7772

EBAY- Market Capitalization (perspective revisited) -- not that logic applies anymore--- However --In a down market logic does apply (we havn't had one since the start of the mania)--- One investment seminar offered the following exercise: 1----take the market Cap.(39 million shares x current stock price $147)= this equals over $5 billion 700 million--- 2----- multiply it x 7 percent (this is what might be achieved if a bond was issued aprox) 5.7 billion x .07 = 399 million (ANNUAL RATE OF RETURN) in other words this is what we could achieve if we put our stock $$ towards a fixed rate instrument annually --- in other words we got together and purchased a bond instead of EBAY 3-- Compound this BOND amount (I will not do the exercise-- but growth is significant -- in two years we are earning $456 million year 2000 -- ($11.40 a share -- with a bond) 4--- compare it to the most optomistic projected earnings of EBAY (net income) if we use the most optimistic view that the business will explode and they will dominate without competition 18 cents per share or 7 million 1999 ///---70 cents or 27 million 2000/// --- 2$ a share or 78 million 2001 5---- finally compare the two --- does the investment make sense? -- if we could be earning 456 million a year compounding in a fixed investment when EBAY's equivalent is earning 6 million/// 27 million and 78 million in the most optimistic scenarios -------I still LOVE EBAY like everyone else / but I have lowered my stake to a small amount--- we are in the mania market cap stage --- once a bad market mood appears the focus on logical business concepts begin to increase -- market cap being one of them--I think --oh well anti gravity boots still on