you make a solid point -- I have not yet decided if I will buy at $50 -- but that is the point when I will consider it -- and here's why:
1) I see ebay as a high risk gamble -- if it can demonstrate some high growth, the idiots that drove the stock to $200+ will jump back in...
2) it does have huge growth potential -- it has an excellent business model -- it reaps commissions by simply acting as a 3rd party in auctions -- if it can grow its volume with the internet growth, its future growth could be huge, which deserves a relatively high PE ratio -- granted at $50 this level may still be too high, but I believe a range of $25-$50 is more realistic for this stock vs. $5 -- high growth potential stocks have high PEs -- there is a risk that ebay does not prosper in the internet, which will ultimately prove $50 too high a valuation -- but for someone willing to roll the dice, I think $50 is the point when you need to start thinking about ebay
3) as you pointed out earlier, I think we are on the same side -- I am saying ebay needs a $30 point drop to even think about investing in it, you simply are stating ebay won't come close to growing to validate that level -- hey, you could be right -- when ebay hits $50, I will research/evaluate further -- till then, I wouldn't dream of touching it
thanks for your comments -- I am glad there are a few sane people posting on this board...
I'm a frequent buyer on eBay and agree that it has a good business model that (when it doesn't crash!!!) creates a wonderful approximation of an "efficient market" of international scope. But until the stock drops dramatically trading in eBay stock seems to me to be little more than gambling in the purest sense (except for maybe the biggest institutional investors who operate in a completely different universe).
Also, it seems to me that one of the biggest problems as the site "scales up" with more listings is that it becomes more and more difficult for potential buyers to simply peruse the listings much less bid on them. You get "buyer/bidder burn-out" and simply stop looking for a while because there is too much to handle. Also, buying in any kind of volume can be a big logistical/bookeeping headache that -- without question -- mitigates against frequent buying. An observation on "crashes" -- last night during the outage (it lasted for at least an hour and a half) I lost a chance to bid on an item and was pretty bummed; but today I got an item at a price that was MUCH lower than it should have gone for given recent auction results and I think this was related to the fact that it was a three-day auction and a lot of potential buyers hadn't had a chance to find the auction. A key point is that if you REALLY want an item you will place a large proxy bid well before the auction conclusion to make sure that you don't get shut-out by an outage -- this will tend to increase the final sale price of an auction because it sets a level that other bidders KNOW they haven't yet reached with lower bids. But if no one REALLY wants an item or you are willing to risk an outage by waiting to place a last minute bid then "crashes" act to reduce sale prices. Which scenario has more affect on auctions overall? I dunno. I imagine that eBay management would argue that it's a six of one/half a dozen of an other wash, but I'm not so sure. submitted for your consideration