Tuesday, July 08, 2008

eBay's Share Price Rises 5% in Early Trading

I know it is still early, but what would explain an almost 5% rise in eBay's share price? The only news I can see out there, is a deal with Google Gmail to put a stop to phishing emails for eBay/PayPal customers who use the gmail service. That hardly seems worthy of a 5% pop.

Nope, there is something else in the wind and it must be quite interesting. I'll see what I can find out.

Just my 12%


Anonymous said...


Randy Smythe said...

Thanks Anonymous!

That certainly would explain some of the Pop.

Certainly PayPal and the International Marketplace biz had a good quarter but the wild card is the US Marketplace Biz outside of StubHub and Non-GMV businesses.

I never bet against eBay at least meeting the Streets estmates because CFO Bob Swan is a miracle worker.

They certainly have been able to build up other businesses to lesson the downturn in the US but can they stop the bleeding.

If the share price drops after earnings it is because investors see through the accounting.

ms.pat said...

You have to admit the one thing ebay is an absolute expert at is manipulating those figures. They could make even ME look like a financial millionaire LOL Smoke and mirrors mostly and wall street falls for it every time.

Stefan said...

Ms Pat, I don't think it's all smoke and mirrors... There is a very big possibility that eBay is actually making more profit now with this new DSR system in place... Think about how many thousands upon thousands of sellers (ahem eforcity, ahem) there are who used to play the old penny/6.95 shipping game and now do $6.95/free shipping, in hopes of getting on top of "best match".

Think about what this would do to eBay's FVF income... It would go through the roof, especially after they raised FVF's across the board. It's actually pretty brilliant when you think about it. They couldn't police the shipping thing, so they created a system where sellers would strive towards impossible goals in order to gain visibility...all at their expense and eBay's gain.

Give up on the whole seeing Donahoe in the unemployment line thing, it's not going to happen. They aren't stupid when it comes to short-term profitability, that's for sure. As far as long-term sustainability goes, well, that's another story.

Anonymous said...

Oil is down 9$ a barrel. Everything is up.

Randy Smythe said...

Anonoymous, the NASDAQ is up a little but not 6%, oil being down could explain some of the rise.

Stefan and Pat,

eBay managers know how to manage a quarter, there is no disputing that. I just wish they had a reasonable long-term plan.

Anonymous said...

Long term? Have you ever seen the trajectory of eBay since it was founded? I think they should be teaching the rest of world about long-term.

Henrietta said...

Those of us who were part of the Seller Community on eBay tend to ignore 'the rest' of eBay Inc.

The auction site is a small and not very profitable part of the whole. PayPal is the big moneymaker followed by StubHub and an enormous part of earnings comes from advertising.

eBay has a long history of lever pulling to push numbers at the end of each quarter. Taking the relative ignorance of the business by analysts as a given, remembering where stockbrokers make their money (as we do, buying and selling) the uptick in share price at the end of each quarter should be no surprise.

Until eBay starts paying dividends its shares are a poor investment. You can do much better elsewhere.