ebay

March 20, 2020

eBay Inc (EBAY) – Buy

I added to my position in eBay Inc. (EBAY) today at $27.625. eBay is not within our top 15 largest positions at this time.

eBay is one of the top shopping marketplaces and we personally use them to sell goods from our retail businesses and I make a decent amount of personal purchases and I sell unwanted personal items there as well.

eBay’s Strengths/ Weaknesses

As a seller on both Amazon and eBay I feel that Amazon is obviously stronger overall as well as Walmart for that matter, but there’s there’s room for a few marketplaces and eBay has their niche. While both Amazon and eBay sell both new, surplus and used products, Amazon is seen more as a new product premium marketplace and eBay is seen more as a discount/ surplus and used marketplace. It also seems that eBay has a lot more flexibility with listings and is cheaper for the seller therefore can be seen as easier for sellers to work with.

I have found that different products we sell sometimes sell at better rates on both platforms. We have some products that sell very little on Amazon, but do really well on eBay and vice versa. Therefore, we don’t see any reason to not continue to sell on eBay. Personally, I have found many products I buy cheaper on eBay than on Amazon again most likely due to the ease of listing and lower fees. Amazon seems to be positioning themselves as a more premium marketplace placing breadth of products and higher levels of service/quality above lower prices. eBay can maintain a good market share for those consumers looking for lower prices with maybe a bit more risk of lower customer service from sellers. That being said, I have rarely had issues with sellers on eBay for personal purchases and have found eBay management fairly reactive when needed.

The recent moves by the company to shed off non-essential businesses and focus more on the core marketplace is probably a good way to go. The capital produced can then be used to reinvest in the business or return back to shareholders.

Reason for Opportunity

The recent pullback due to the COVID-19 scare doesn’t make sense to me as it appears that they should be getting more sales with more people going online to buy instead of going to physical stores and those looking for lower prices.

eBay Valuation

eBay’s valuation looks good:

Forward PE: 9.13
PEG: 1.37
Earnings Yield: 7.61
Forward Dividend Yield: 2.32%

The PE and earnings yield are great comparatively speaking and the dividend yield has become increasingly attractive like many companies lately.

May 23, 2014

I Love Catching Falling Knives

Jeremy Ryan AAPL, AMZN, CBU, CSCO, DDD, ebay, GE, GMCR, GOOG, GOOGL, MBVT, SPLS, SSYS, SWIR, T, VZ 0

FALLING KNIFE DEFINITION: A slang phrase for a security or industry in which the current price or value has dropped significantly in a short period of time. A falling knife security can rebound, or it can lose all of its value, such as in the case of company bankruptcy where equity shares become worthless. A falling knife situation can occur because of actual business results (such as a big drop in net earnings) or because of increasingly negative investor sentiment. Source: Investopedia

I do like the falling knives! I usually find the best opportunities in the companies who’s stocks fall hard, some deserve it, but sometimes is unwarranted panic selling. I got many of my current holdings this way. I bought the bulk of my Merchant’s during the last economic crash when all banks were being sold no matter how safe/dull their business practice was. Cisco (CSCO), Keurig Green Mountain (GMCR), GE (GE) Google (GOOG), eBay (EBAY), Apple (AAPL)… I bought my stakes in all of these when people were overly pessimistic on them.

Why Catch Falling Knives?

Often, you will have companies have some bad news, maybe an earning or sales miss, an unexpected one time expense… temporary problems even though the company’s business is sound, the stock will drop hard. This makes for a great opportunity.

Some of the ones I’m looking to buy now are Staples (SPLS), Merchant’s Bank (MBVT), 3D Systems (DDD), Stratasys (SSYS), Amazon (AMZN), AT&T (T), Verizon (VZ), Sierra Wireless (SWIR) – either for the fact that they have fallen a bit, but still have sound fundamentals based on the current price or have decent dividends which help keep a floor on further downward pressure with great potential for upside.

But generally right now I’m putting together a nice list of potential ideas while keeping a wait and see attitude, waiting for the right time to strike.

MBVT is one that I’ve consistently held a core position while trading around it. I like it at $28.50 or less usually. At the last stockholder’s meeting (which I still need to post my write up on) they mentioned they are in the process of completely upgrading their computer system which will increase efficiency, customer service and lower overall cost. However, the whole cost of this upgrade is expensed this year so it could scare people (which it looks like is already happening) that just look at the numbers… could create a nice opportunity there.

February 1, 2011

eBay Inc (EBAY) – Sell

Jeremy Ryan ebay, eBay Inc. 0

Sold a portion of our eBay (EBAY) position today.

While I feel that eBay is still a very strong business with good potential going forward I think that the current price to earnings to growth is getting high at this point (PEG 1.6).

However, I don’t feel it’s high enough to sell my whole position, as I believe that eBay still has some good growth surprises in store, especially with it’s Paypal business. However, there are uncertainties with the eBay.com business due to the mounting competition from Amazon, Google and traditional stores that will be a continual source of pressure on them.

Therefore, I am keeping my core position, but any future amounts I will want to get a good discount to help reduce the risk. I will need to determine at what price I would like accumulate more shares again.

July 1, 2010

eBay Inc (EBAY) – Buy

Jeremy Ryan ebay, eBay Inc. 0

Ebay (EBAY) is one of the top shopping websites and I personally use them to sell goods and services and use Paypal significantly within my business and to make personal purchases.

While Ebay is a great service to the online community, which I use significantly in my own business, I feel that Paypal is their greatest opportunity for growth. The amount of payments I receive in my online businesses through Paypal is substantial and continues to grow and I use my Paypal card to make most of my purchases online and offline.

I consider the current downward pressure on the stock to be a great opportunity to pick up more shares in this great company at a great price.

January 27, 2007

Patience is a Virtue

Jeremy Ryan ebay, Labor Ready, LRW, Microsoft, MSFT, Sandisk, SNDK 2

When investing, you sometimes need patience. Especially when you invest in companies that are out of favor with wall street. However, it’s usually when wall street hates a stock, that it gets cheap. As an investor, it’s our job to research these stocks and determine which ones deserve to be down and which ones are simply a victim of an overreaction or loss of patience.

Ebay Two of my last investments fall in this category. Ebay (EBAY) and Microsoft (MSFT) both have been out-of-favor with wall street. Ebay has been down for what I believe are some misunderstandings by the media regarding their business, which if you researched you would have found they are stronger than wall street gave them credit for. There was also an over-reaction in the believe that Google Checkout was going to destroy Ebay’s Paypal business.

Microsoft was simply a patience issue. Wall street was tired of waiting for new operating system and office software to come out. Wall street reacted as though they were never going to be released and so the stock was sold off very heavily. This posed a great opportunity for investors like myself to pick up some shares really cheap. However, for a while the shares did nothing, but the last 2-3 weeks have been great for both Microsoft and Ebay.

A couple of my current situations that I believe to be similar are Labor Ready (LRW) and Sandisk (SNDK). They are both currently out-of-favor with wall street as their stocks are much cheaper than most stocks I watch. I imagine the Labor Ready is down due to fears that the recent minimum wage increase will hurt them and Sandisk is down to a current oversupply of chips, which they will most likely need to mark down to sell. I don’t think either of these problems are going to affect the companies in the long term. Both are strong and stable businesses. Labor Ready deals in temporary manual labor and they have minimal competition and they are very profitable. Labor Ready is expected to get a lot of work through post-Katrina construction. I think the wage increase concerns are overblown.

Sandisk Sandisk will simply discount their current stock and make more money on the forthcoming chip production. They continue to stay ahead of their competitors with new innovations and they have a ton of cash and no debt. With the increasing popularity of handheld electronic devices such as digital cameras, cell phones with storage, mp3 players, handheld video players there is going to be increased demand for small storage cards, which they’ve got. Sandisk’s cards are regarded as the most innovative and reliable. I would not bet against them.

Buying shares in either of these companies and waiting a few months or a couple years should pay off very well.

The bottom line is you must do your own research, don’t just take what the media and/or wall street says and you must have patience if you are going to bet against wall street.

Full Disclosure: I own shares in both Ebay and Microsoft. Sandisk and Labor Ready are potential new investments that I may or may not make in the near future.