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

To: Jing Qian who wrote (2552)	4/10/1999 9:46:00 PM
From: Nelson Chang	Read Replies (3) \| Respond to of 7772

Let me tell you about the going on's with EBAY, and EBAY with respect to CPQ and AMZN as well. 1) You have significant accumulation of EBAY since its breakout of $160. It tested that w/ the weak opening Friday in which it opened down 5 points. But along with the stronger net stocks came roaring back. That accumulation gives EBAY a much stronger relative strength - which is needed during market weakness. 2) 60% of EBAY is held short. This is one of the most shorted stocks in history. Especially one which trades several million shares a day and has such exposure. Many of these shorts are forced to buy at inherently higher prices due to margin calls. Margin calls are caused by a significant dip in someone's portfolio. A market selloff would cause such a dip, even though they are short EBAY. I hope everyone is following me so far. EBAY's relative strength exacerbates this during market weakness, because these investors have stocks they are held long going down because of the market, all the while EBAY is holding strong and maybe going up causing them to lose addition equity due to their EBAY short. Hence, margin call and inherent short buying. 3) One may argue about AMZN's entry into the auction market. But at this point there is not enough info to assess their penetration. All I can say is that as an EBAY user, I remain loyal to EBAY. EBAY also has more buyers so it makes sense for me as a seller to use EBAY. I may use both, but EBAY is most likely to have the final buyer, and EBAY will get that commission. Finally, AMZN's auction site isn't any more impressive in my opinion to force me to use AMZN in lieu of EBAY. 4) CPQ pre-warned already. And quite honestly CPQ is a pathetic company. It is the weakest of the PC vendors. One might argue that weakness in PC's will result in slower internet growth. This is true. But there are 2 things. #1 is that the PC sector is cyclical. The internet sector isn't so far, even though it does depend on PC growth. #2 is that the internet does not rely proportionally to PC growth. If PC growth slows, internet growth may ease but far far less. And at this point, any PC slowdown is easily offset by the still exponential growth of the internet. EBAY may rise or fall on Monday. But this is EBAY. And I hope this helps your understanding of it.