posted on July 9, 2001 04:13:21 PM new
Here are the year 2001 totals
http://www.medved.net/cgi-bin/cal.exe?ESHYy2001
Anyone who thinks eBay is "really" growing at 50% per year should take a look. The "growth" is coming at a very high cost (hundreds of millions spent to acquire things like Half.com, Korea, iBazar, etc, ALL of which are losing money, some losing LOTS of money).
Even using the "most optimistic" scenario for BIN (which lowers the apparent count of auctions) and IGNORING the double counting that occurs when sellers list in two categories (which artificially raises the count), there's little doubt in my mind that auction counts are on the decline (at least 10% this year, maybe closer to 20%).
Sell through is lower. Prices are lower. Number of auctions is lower.
There's a finite amount of time that they can hide this (BTW, my guess for the quarter is that they will NOT report auction counts anymore -- they'll report total LISTINGS, which will include stores, Half.com, etc -- will be a "new number". This should hide the fact that their "core business" -- auctions -- are declining significantly for at least another quarter or two).
posted on July 9, 2001 04:13:54 PM new
I don't think eBay will make the increase in revenue of $3 billion. eBay was making $500 million a year in revenue. eBay will have to do over 7 times what they did in 2000. 49 million listings and equal sell through- not hardly, ain't gonna happen.
If the economy wasn't going South, I would hedge a bet eBay could make a $1.5 billion increase in 3 years.
At 8 cents a share actual profit and growth stalled and falling as we have seen in the listings, we're looking at an $8 - $10 a share stock, unless revenue growth can be turned around.
eBay swallowing these overseas auction sites will be a revenue exchange rate nightmare- their management has no experience with echange rates or how to handle currency arbitrage, and even the best corps are now reporting problems in foreign earnings from exchange rates due to a strengthening dollar.
I'll be the first one to proxy to Meg if she does it, but until then I'm watching for shorting opportunities.
posted on July 9, 2001 04:38:19 PM new
The $3 billion revenue target is a 2005 target.
They will be lucky to do $150-175 million this quarter, unless they play significant games (they will...)
With the 10,000,000 shares available to issue at their whim, there's no doubt they could do $3 billion with ease by 2005. Heck, they could buy Amazon.com -- they do $3 billion a year in sales alone (and have something like 50 million of users ???) Would even be consistent with their storefront & auction effort (LOL).
Amazon loses SO MUCH MONEY each year (-$1.9 billion last year I think), they might be able to pull the deal off with a "low ball" offer of only a few billion $$'s... (LOL again, but maybe not as far-fetched as you'd think -- THAT PART would also be consistent with their efforts, to buy companies that generate revenue, add users, but have a negative impact on the REAL bottom line).
posted on July 9, 2001 08:55:43 PM new
10 million shares of eBay stock is worth 640 million dollars. Amazon has more than that in cash.
And while the 10 million shares eBay tucked for acquisitions looks like a lot, if the core business growth stalls and the revenue projections aren't met, the share value falls rapidly.
Ebay is at $64 a share now due to speculation that the growth experienced in the past will continue. As we are presently seeing, listing growth has started to top out between 5 and 6 million. eBay is hoping that the average price of items sold will continue to go up. Collectables have already fallen in price. eBay is hoping that automobiles and Sun Systems equipment will keep the sell prices rising. However Sun and others are moving an inventory glut from the dot com bubble bursting. Automobiles are an interesting commodity on eBay. Unless sales are regional or better yet local, the shipping costs are an expense that ill affords for eBay to do much in sales on a national basis.
Buying other venues will be tougher as share value drops, and if analysts see the core US business growth stall, the share value of eBay will drop.
Europe and Asia are experiencing worse economic numbers than the US. Buying into venues in these economies will not meet the projections as they now stand.
Just bide your time. One time missing the 50% growth per year projection and eBay stock will be dropping.
posted on July 10, 2001 03:25:17 AM new
reamond, I think it's just a matter of (short) time before Amazon can be bought for a few billion (that is, if they don't file for bankruptcy first - LOL).
I'm not sure I agree with your point about eBay dropping if business stalls. The truth is that eBay is virtually the ONLY tech play that shows a profit (even though it's pro-forma & they really haven't made anything yet). As long as folks continue to invest in tech stocks, eBay will get the lion's share of that money. Good revenue, showing a (manipulated & misleading) 8-figure profit! How many tech companies can boast that? Portfolios need diversity. eBay will (continue to) be a component of those tech funds until there are 20-30 companies that look better... I'm not holding my breath waiting for that.
FWIW, I think eBay will work it's way down to a P/E in the 20 range in 3-5 years as the business matures and becomes more predictable. I'd be AMAZED if they can MAKE more than a few hundred million each year though (even on the $3 billion in sales). BTW, they reported $48 million last year in income. Do the math if you want to see what I think the stock price will be in 3 years (remember the 10 million extra shares & the fact they'll continue to dilute when you calculate) Figure $300 million income, 300 million shares outstanding (FWIW, both numbers are optimistic IMHO), 15-20 P/E ratio.
(Full disclosure -- eBay isn't in my portfolio, nor would it be at any price. If it weren't so manipulated I'd be tempted to short, but I'm just staying on the sidelines for now, all in cash. Can't believe that people who are otherwise very intelligent can't see what's coming in the stock market...)
posted on July 10, 2001 10:59:11 AM new
reamond, it will be tough to increase ANY fees when auctions are declining and sellers are "restless". It will be a sign of desperation when they resort to that (inevitable) step IMHO. What will likely be met with "exuberance" on Wall Street is the exact thing that should make them run...
FWIW, their costs should be going DOWN, now that they have more revenue and the necessary servers in place (was anyone else impressed that the site didn't crash on 6/28???) Outside of energy (which is very minor for their operation as a % of revenue), the other costs are controllable and probably lower than they were a year ago (when they had to buy all those new servers). Sorry, but don't pass along "marketing expenses" to me, especially when you're recruiting people that compete directly with me...
Maybe we should be asking them when then prices might DECREASE due to "economy of scale". No doubt the actual "cost per auction" on eBay-US has decreased SIGNIFICANTLY over the last few years. You know, "pass along that cost savings as a thank you to the community that made them what they are" (LOL, I'm holding my breath waiting for that one)
posted on July 10, 2001 12:20:43 PM new
Me thinks eBay wouldn't mind dropping a lot of small sellers, perhaps a million or so, provided eBay can boost and replace revenue by raising the the average price of goods sold with large retailers.
Cost wise, small sellers are more expensive than big ticket large volume sellers. At what point does eBay become a database and not a shopping/auction venue? I think it already has become just a database.
Browsing has become an impossible task on eBay- there are just too many listings. For buying as well as checking prices, I use eBay as a database, not a "shopping" venue. It is extremly hard if not impossible to get an otherwise unknown item in front of the customer on eBay for a simple listing fee. A business can't count on consumers "stumbling" upon their product.
eBay realized 2 years ago that the "garage sale/collectable" model was limited - and appears to have hit its limits with falling prices and stalled listing growth. eBay attempts to run away from the garage sal/collectable image at every opportunity.
The sad fact is that the small seller, which brought the buyers to eBay, is going to suffer whether eBay's growth projections happen or not.
If the projections are successful, small sellers become an ancillary appendage to eBay. If eBay is unsuccessful, listing and FVF go up at least once a every year.
BTW- AOL raised its rates and added 3 million more users. eBay is saving a listing and FVF increase for a quarter when revenues will not meet projections, which may happen before the year is out.
posted on July 10, 2001 01:08:35 PM new
reamond, given what the stock is doing today, might be even sooner than the end of the year My guess is the institutions got the "hint" today and are getting out before it's public...
posted on July 10, 2001 03:33:42 PM new
I reckon eBay made plenty with FLD.....
They got hostage fees, sorry I mean hosting fees, IPIX fees until it croaked, 10 day fees @10c, all usually doubled with the dual category option picked.
Next comes all the FVF......what a bundle.
Now they get relist fees and/or FVF again.
But they cannot point to their medved charts confidently.
To-day shows a totals graph see-saw tottering at 5M.
Raising fees again would be a debateable success, another FLD soon is much more probable as the giant calculates their profitability.
posted on July 10, 2001 03:40:30 PM new
Nobody has pointed out that the way the totals are tallied at this site is from the number of listings in each catagory--so auctions in two catagories are counted twice. Since this feature was installed at eBay (was it about a year ago??) the numbers of auctions shown on this site are higher than the reality.
posted on July 10, 2001 08:27:52 PM new
What will be the major factor to cause ebay stock to fall - not the falling auction listings. The billions of dollars of stock sitting with the ebay insiders. As more and more shares hit the market, the supply of tradeable ebay stock increases. Not sure why the demand for ebay stock can keep pace.
posted on July 11, 2001 03:29:54 AM new
JAYESS pointed out that listing in 2 categories (which many do) will artificially inflate the count. It's also important to note that the use of Buy-it-Now will DEFLATE the count. The totals show ACTIVE auctions and you're trying to use that to predict TOTAL LISTED AUCTIONS. If active auctions disappear quick (i.e BIN), the count "looks" artificially lower.
For example, compare the scenario where one person lists 10 items a week.
If they were "regular" auctions (no BIN), the "count" would be 10 for each day of the week (average medved of 10). Let's say they now list with BIN, and they all sell on the first day. The count is now 10 on the first day, and ZERO for the next six (auction count average medved would be 1.4). In this extreme example, BIN reduced the average number of active auctions by 86%, even though the TOTAL # of auctions were identical.
Having said that, I really don't think BIN is a big factor though -- only about 30% use it, and for those that do, only 30% sell on average (ballpark guesses on my part, but probably pretty close...)
BIN = 9% decrease in count
double categories = 10% increase in count (another guess that 10% use double categories)
My belief is that BIN and double categories roughly offset each other and the totals shown on Medved are pretty close to reality. If anything, they're "slightly" higher than reality (if more than 10% use double categories)
Anyone that does searches sorted by "new items" knows that the counts are truly down. When you sort that way, you DON'T see double counting from 2 categories (you'll only see an item once, even if listed in 2 categories), and you DO see all of the BIN items (early enough that none have sold yet). I do several searches (in multiple categories) and would guess that listings on the US site are down anywhere from 5-10% this quarter.
Most eBay followers would note that US auction listings are becoming a smaller part of the overall revenue stream (and as such, are less important from an "investor" view). Half.com, the international sites, etc all contribute more than they did a year ago (to REVENUE, NOT to profit -- they're all still losing money)
I'm always amazed that Wall St reacts favorably to someone "buying" revenue streams which are unprofitable (with little hope of ever becoming profitable). Those are a real waste of $$ in my opinion. It takes focus & finances away from the core business and makes the site exponetially more difficult to scale. Why add all these unnecessary "pieces" to the already very complex "puzzle"??
posted on July 27, 2001 03:44:44 AM new
Looks like it's back to normal to me. STAGNANT
Remember, FLD caused many to "bump up" their auctions and list them on 6/28 when they would have normally listed them later. The drop BELOW usual levels in the week following FLD was expected (those items were "bumped up". The fact that listings are back up to where they used to be is actually a little WORSE than I would have expected... I would have assumed many of the MILLIONS of unsolds from FLD would be relisted 2 or 3 times before folks finally gave up -- that should have resulted in a few hundred thousand listings ABOVE normal following the "spike". That didn't happen.
Maybe things will pick up in the fall. Who knows.
The important point is that it's obvious to everyone (probably even eBay) that US auctions aren't going anywhere. Those interested in knowing how eBay is doing must now chart FOREIGN sites (iBazar, Korea, Germany, UK, etc) which are NOT included in Medved, and must now make estimates about Half.com and stores (not easy, or even possible, to chart those right now)
The key to eBay's financial success will depend on (a) how long it takes to get International profitable ("whether" they can EVER get profitable is the better question IMHO), (b) how long (or "whether" they can get Half.com & stores profitable, and (c) how quickly they raise auction listing & FVF fees on the US site (don't think it isn't coming... probably sooner than you'd imagine)
posted on July 27, 2001 06:38:04 AM new
"the use of Buy-it-Now will DEFLATE the count. The totals show ACTIVE auctions and you're trying to use that to predict TOTAL LISTED AUCTIONS. If active auctions disappear quick (i.e BIN), the count "looks" artificially lower. "
No, the argument is flawed. It makes NO difference whether the listings are as a BIN (call it a one-day auction), or a 3, 7 or 10 day auction. The length of listing has NO effect on the average number of current listings.
You can't base the result on a single seller example. Use 7,000 sellers each listing 10 items per week randomly (an average of 10,000 items per day).
No matter the length of the listing, after one week, and assuming that every seller lists new items when his listed items are sold (or the listing time runs out), the average listing number remains constant at 70,000 items.
Vinnie
[ edited by capotasto on Jul 27, 2001 02:09 PM ]
My guess is the institutions got the "hint" today and are getting out before it's public...
. The fact that listings are back up to where they used to be is actually a little WORSE than I would have expected... I would have assumed many of the MILLIONS of unsolds from FLD would be relisted 2 or 3 times before folks finally gave up -- that should have resulted in a few hundred thousand listings ABOVE normal following the "spike". That didn't happen.