Make no mistake about it, the current market sentiment has largely written off eBay as a failing business. Lower GMVs (Gross Market Value), stalled user growth (at 3% Y/Y), economic downtrends, new radical changes to the core site, and extreme competition from other sites like Amazon are all putting unprecedented pressure on eBay.
With so much negative forces, it’s no surprise that eBay is being thrown in the dumpster.
A more holistic view
There are legitimate concerns about deceleration to the eBay.com property (especially in the US market). I believe though that the investment community at large is missing key pieces of the EBay Empire. The only way current valuation makes any rational sense would be to assume that the other eBay properties (including their fast growing Paypal.com/Skype components) will undergo a contraction in revenue; something that even naysayers have trouble foreseeing.
Just a few facts
eBay generated 2.11 billion dollars in revenue in the 3rd Quarter, of this 952 million (or 45%) came from sources outside eBay.com! Let me break it down
597 million from Paypal (27% Y/Y growth)
212 million from Non-eBay sites, Shopping.com, Rent.com, Kijiji (29% Y/Y growth)
143 million from Skype (46% Y/Y growth)
As you can see those are very healthy growth numbers (especially in this economic climate) True these divisions do have lower margins then the traditional eBay sites, but fortunately their high growth rates offset this shortcoming for now. Do people realize that almost half of eBay is not eBay.com (as people know it?)
Getting something for nothing
I’ll let people absorb this and in my next post, I’ll show how I believe investing in eBay today is like getting “something for nothing”
Good Luck everybody