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Indeed, what happened today? Another day of significant gains as eBay Inc. (NASDAQ: EBAY) shares were up by 4.76% or $1.29 to close at $28.41. If you go look at the intra-day chart, you'd notice that the rally started around noon.
So what did we have? Actually, around that time we had the press-release regarding eBay's PayPal settling a potential class-action case and also agreeing with attorney generals about its user agreement and protection programs (protecting users against fraud in very general terms). The agreement was voluntary and eBay has actually already implemented some of the things agreed upon. It will cost PayPal $1.7 million.
The class-action suit settlement , again regarding information communicated to users about PayPal's protection program, will cost PayPal $3.5 million. According to the settlement, PayPal is also not admitting any liability for any of the allegations in the two cases.
As far as I see it, eBay and PayPal came out light on these matters. PayPal will clean up its act and those concerns will be behind it. There's nothing worse to a stock than uncertainties surrounding the company.
But did that cause the rally in the share price? I'm not sure. All I know is that in addition to all the rumors that floated around this week, a few analysts came out with very bullish calls. Today it was Credit Suisse saying that "Ebay's Aug. 22 price increase seems to be having the intended effect." He was referring to the recent fee hike that was intended to shift the mix in listings from Store to core.
Credit Suisse analyst calculated that since the new fees were introduced, store listings declined about 25% from peak levels, with 1,500 stores closing, and core listings rose 16%. Exactly what eBay wanted, exactly what analysts and investors were looking. So perhaps this could explain the nice gain today. Now it remains to be seen how the store closures will affect eBay, if at all.
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Reader Comments (Page 2 of 2)
9-29-2006 @ 4:50PM
Melly said...
Ann and everyone else,
As you know by now, I hardly ever edit or delete comments, but let's try to keep the conversation civil and related to the subject matter (eBay) rather than personal comments. I understand, I really do, that merchants are very sensitive right now as they feel their livelihood affected, but please...
If anyone here is offended by a comment, please let me know, but by now I think we all pretty much know "the usual suspects" here and what to expect from each of them - the bulls, the bears, the store owners, etc.
Alex, I do think a post that would analyze analysts' numbers would be quite boring. I try to give my opinion on certain issues but right now analysts are giving eBay investors a split personality with their conflicting and nearly opposing views, data and forecast. It is hard to tell what is really going on right now as far as listings growth, GMV and all the rest of the really important data that could affect eBay's revenue and profit. I hope it would become clearer soon and that we would see some convergence, if not of opinions, then of at least data.
9-29-2006 @ 4:51PM
Alex said...
That's it Ann. If in doubt, chuck your toys out of your pram. The truth is that Ebay are in a state of chaos at the moment, especially now former teacher's pets are speaking out:
http://auctionbytes.com/cab/abn/y06/m09/i29/s01
And Ann, if you don't like what you're hearing you can always choose not to listen...Not a recommended tactic though.
9-29-2006 @ 4:53PM
Mike - 2L at Chase College of Law said...
Ann,
Respectfully, my post was an answer to the question that you asked, which was what should Ebay's stock price be?
In my previous post, I did not answer you question directly.
My direct answer is that I have no clue what Ebay's stock price should be.
They have down-side potential that far outweighs the upside potential.
My prior post outlined what could happen in a worst case senario. I have no idea what will happen.
But for the record, I side with the 3 analysts who have a sell rating and a $25 12-18 month price target.
9-29-2006 @ 9:57PM
Ann lambert said...
Mike @ C.O.L
You mean well, not intended to harsh at you, you do have what is takes.
Just my pennies input here “pay attention to what’s not been said, and always be sure of your caliber.”
Read the poem by Henry Longfellow: The Psalms of life.
Enjoy
A.L
9-30-2006 @ 5:25AM
Alice Wooster said...
Ann, 'respectfully', is it not the case that 'a business model to generate cash flow' is dependant on its CUSTOMERS? Particularly BUYERS in Ebay’s case. It’s a shame you can’t discuss this sensibly without feeling the need to resort to personal insults.
9-30-2006 @ 8:54AM
Ann lambert said...
Alex, as I mentioned “pay attention to what’s not being said”
I looked at your reference “auctionbytes”, go back and look at the sponsor links at the bottom of the pages ‘ad by google” IT”S EBAY.
So you too "can always choose not to listen"...
9-30-2006 @ 11:07AM
Ann lambert said...
Alex,
Those sponsor-links are what is known as a subliminal P.R spin
10-07-2006 @ 11:37PM
Marty said...
I have found your column and the follow ups interesting.
I would like to point out a few issues with the "numbers"
First of all, you cannot say that the loss of store items pushed up the core listing volume for a few reasons.
First, seasonality always increase core listing volumes during this period. Please consult information available from medved statistics (compare each year this time of year).
Second, as others pointed out there were those India items.
Lastly, many of the listings are people clearing out the last of their store items.
Generally speaking I believe eBay has a lot of potential but appears lost at the current time.
Only eBay could take their biggest success story which was the development of the largest group of online merchants in the world (eBay stores) and say that that diluted the "magic" of eBay.
They have their hands in all the right areas but have lost focus. Despite all this when Cramer said SELL at 22 that was a buy signal ;)
ebayer