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eBay Inc. (EBAY) Message Board

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  • mdccohen mdccohen Sep 30, 1998 11:38 AM Flag

    EBAY is going even higher.

    Its meaningless to compare share prices for the
    two companies. Buying a 'share' of a company means
    you are purchasing a percentage of that company.
    Because different companies have different numbers of
    'shares outstanding', '1 share' means a diffent
    percentage of ownership for each company. When you buy a
    share of disney, you are buying 0.00000005% of the
    company. When you buy a share of e-bay, you are buying
    0.00002857% of the company. This is because Disney has 2
    BILLION shares outstanding, and e-bay has 3.5 MILLION
    shares outstanding. It is much more meaningful to
    compare market capitalization (how much it would cost, in
    theory, to buy the whole company). To get that number you
    multiply share_price * shares_outstanding.
    Disney's
    market cap is about 52 BILLION. Ebay's is about 157
    MILLION. Anybody feel free to correct me.

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    • ...shares not sold to the public, i.e. insider
      shares. I have seen market capitalization calculated your
      way (i.e. just using outstanding shares), but most
      people use all shares in calculating market cap. This is
      how the current market capitalization of roughly 20
      BILLION (not MILLION) is derived for EBay. And this is
      why so many people are short on the stock - there is
      no way that this company is worth THAT much. And
      this is why the shorts feel that as soon as insiders
      sell, due to simple supply and demand, the price will
      drop.

      Why should you look at ALL shares, not just those in
      the public float? Because as soon as you calculate
      earnings per share, or maybe even dividends (am I dreaming
      about that with EBay?), they are devided by the total
      number of shares.

      Actually your valuation of 157
      MILLION for EBay is not far off target in my book, though
      now most of the longs on this board think I am nuts,
      since it would imply a far lower price for their
      stock...

    • Mdccohen... I'm correcting you. Ebay's
      capitalization is 1.2 billion, not 157 million. Disney's total
      oustanding shares are valued at 52 billion (fully diluted
      shares not withstanding). Ebay's float is 157 million...
      I surmise... but its outstanding shares are worth
      1.2 billion.

      I surmise that you didn't take
      the TIME to do your math and it is always wise to
      calculate the fundamentals before going long.

 
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