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eBay Inc. (EBAY) Message Board

  • westes2 westes2 Oct 26, 1998 11:54 AM Flag

    Analytic explanation of the eBay market

    Honestly, I don't get it. Let's assume, as the
    DLJ analyst this morning said in the eBay press
    releases, that the market for person to person merchandise
    is 180 billion worldwide.

    Assume that in
    five years 33% of this commerce is done by the web,
    through auction services. (Boy, that seems OPTIMISTIC.)
    That's 60 billion worth of transactions.

    Assume
    that eBay captures 60% of this business, which would
    be 36 billion of transactions.

    Assume that
    eBay generates 5% commissions from each of these
    transactions, which would represent gross sales to eBay of 1.8
    billion dollars.

    Assume that each sale is for
    about $50, which means maybe 720 million transactions.
    Figure three times that amount represents total
    transactions, including those that didn't close any sale.
    That's about another 1/2 billion in revenue.

    So
    eBay's best-case gross revenue five years out would be
    2.3 billion dollars. Their current market
    capitalization is already near that. So what is my upside on
    this stock? I have to pray that they blow the doors
    off the world market for five years, and in that very
    unusual case where they succeed in doing that (maybe a
    10% chance of happening), I maybe double or triple my
    money?

    What am I missing? I don't see ANY case for a huge
    upside on this stock that makes me 10x my money in any
    reasonable period of time.

    Will

 
EBAY
57.14-0.39(-0.68%)Dec 19 4:00 PMEST

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