Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: GCAT who wrote (2107)	3/10/1999 9:29:00 AM
From: Tom Hua	Respond to of 7772

From today's Thestreet.com: It's one thing to compare some of these companies to Cisco (CSCO:Nasdaq), which in its earlier days -- when its stock was a rocket -- traded at 10 times forward revenue. It's another to blindly believe in, say, an eBay (EBAY:Nasdaq) at 20 times projected gross annual sales of $1 billion -- and we're being conservative by using gross sales, not actual revenues. If you use actual revs, and generously figure that the company will generate $100 million this year, you're still dealing with a stock that trades at a hefty 200 times forward revs. The purpose of today's sermon isn't to try to pop bubbles; it's to remind you that every company, especially those that are growing quickly, has risk. For example: eBay: There's no debate that it has rapidly developed a strong brand and loyal following. But it also charges a hefty commission, while an alliance between Yahoo! (YHOO:Nasdaq) and Onsale (ONSL:Nasdaq) does the same thing for free, relying instead on ad revenues. What if eBay is forced to revise its business strategy and switch to advertising? (Of course, you could argue: What if eBay adds advertising?) There's also a flood of competition both on- and offline and a risk -- just a risk -- that someone will aggregate local auction sites. How would that affect eBay? (It may never happen, but you've got to consider the possibility.)