Tuesday, September 09, 2008

"Darlings of the Valley" Continue to Sink.

I usually stay away from Wall Street on the blog, but I just can't help commenting on two former "Darlings of the Valley" eBay and Yahoo. 
  • Since rejecting Microsoft's buyout offer of $44.6 billion back in the early part of the year, Yahoo's share price has sunk to $17.78 a share and the companies Market Cap is now $24.6 billion. The free-fall is happening even though they have a search outsourcing deal with Google -- maybe the regulatory concerns are having an effect.
    How can shareholders put up with this? Sure the market as a whole is down but the Microsoft offer looks like a killer deal now.
  • eBay just crossed into $22 territory ($22.92) for the first time in 2 years and there are no signs that the trend will reverse itself. If this trend continues does the $19 price target of Deutsche Bank's Jeetil Patel come into play during the first quarter of 09'? At $19 a share is the company in play? With $4 billion in cash and a consensus value of PayPal at $15 billion, does eBay, Inc. really come into play for Google or Microsoft when the Market Cap is $24 billion?
The next few months are going to be very interesting to watch. Investors are already voting with their shares.

Just my 15%


Anonymous said...

I think the CEO makes all the difference, at least in these two cases.

Henrietta said...

By an amazing coincidence I was also pondering this issue this morning. Looking at the MSN Money Central chart, I set the dates to between April 1st (when John Donohoe took over) and today, closed at 22.95.

Other than a one week 'honeymoon' when the stock rose a whole $1.02 from $31.42 to $32.42, it has been pretty much down hill month to month all the way.

Apr 1st $31.42
May 1st $31.78
Jun 2nd $29.31
Jul 1st $27.74
Aug 1st $24.58
Sep 2nd $24.07

Not being a Harvard MBA my opinion probably doesn't count for much but even Auntie May & I can calculate that is a 23.4% drop under Donohoes stewardship. Not small potatoes.

At what point are the institutional investors going to join the sellers in being 'disgruntled' & 'revolting'?

ms.pat said...

Kind of reminds me of Home Depot when Nardelli was at the helm...."down and down you go, round and round you go in a spin"...Ebay is experiencing the same dance. I had to finally sell my Home Depot shares at a slight loss just to get them off my back and I'm afraid Ebay stockholders are going to get stuck doing the same until managment changes. If it doesn't change soon only Paypal will be left! At the present rate I would say 19.00 a share in 09 is "optimistic".

Anonymous said...

i wouldnt pay $5 for ebay stock now. they just said they are going to allow more junk listings and not charge listing fees or hold the new sellers to a dsr ala buy.com, there goes the last of the consumer confidence. even if the board of directors puts in a new ceo next month it may be to late.