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

To: Steve Smith who wrote (1115)	12/18/1998 8:14:00 AM
From: Stewart Elliot	Read Replies (1) \| Respond to of 7772

After reading the prospectus, the actual lock-up period is over either 1/23 or 1/24 (lock-up period of 120 days). There is a clause that would allow selling as early as 12/23, but it required permission from the underwriters, and there doesn't seem to be a way to find out if such permission was granted. So, my guess is that 1/23 will be the first day the insiders start to sell shares. With or without the permission, the only restricted shareholder that could conceivably sell on 12/23 is Benchmark Venture partners. Officers inside the firm can not sell this close to the end of the quarter (I'm sure that ebay has the same set of internal executive trading restrictions as most firms). Another thing to keep in mind is that this is a year ending quarter, so EBAY may not release earnings until 1/30 to 2/15, which would further delay officers from selling. However, Benchmark will not be restricted by the earnings release, and will likely start selling immediately (on 1/23), and try to dump as many shares as possible before the other insiders can sell. I believe that we will see some loosening of the float on the first trading day of the new year. Many holders have huge tax exposure on EBAY, and will likely wait until 1999 to release shares. I predict that this will be the first point where the share price starts to decline significantly. Once Benchmark sells its 4,000,000+ shares (doubling the float), EBAY's decline will accelerate. I've seen the "yahoos" talk about splits as though they automatically double the price (how do these people get the money to invest?), but here's a case where we will see a "virtual" split, with no corresponding doubling of total shares. Only the public float will double, and that will certainly impact the stock price. EBAY will likely stay as one of the internets darlings, but I can easily see a $75-100 price (by end of 1Q) once the hype settles, and the float triples.