Comments on: eBay – What’s It’s Worth

By: Alex

Alex — Tue, 24 Feb 2009 02:27:12 +0000

What? From the look of this chart, ebay CF is consistent

By: Jae Jun

Jae Jun — Tue, 24 Feb 2009 01:43:24 +0000

to me eBay is no longer a hot growth company. I would say it is more of a mature growth company.

So if I look at the past 5 years to determine whether eBay can continue in the future, their FCF is quite erratic, although positive. Their capex is continually growing, and if we look at the company at different timeframes, we see that earnings have been quite wild as well.

I think I would prefer a company that manages a consistent 15% EPS growth rather than 60% then 17% then -40% etc.

So that’s what I was referring to but other aspects are very good.

By: Wide Moat

Wide Moat — Tue, 24 Feb 2009 00:50:58 +0000

Care to say a bit more, Jae? Ebay strikes me as fairly consistent in revenues and expenses. They did write down 1.4 billion in goodwill in 2007 from the Skype acquisition. This was a non-cash charge, so no impact of cash flows. Though it does show that they likely overpaid for Skype.

Thoughts?

Wide Moat’s last blog post..Buffett, Technology, and Moats

By: Jae Jun

Jae Jun — Tue, 24 Feb 2009 00:41:35 +0000

ebay obviously has a huge moat in terms of online auctions. It’s network effect cant be beat but I really cant put a confident figure on ebay because it has never been consistent enough. It has good numbers and all but the consistency in all areas is lacking.

By: WideMoat

WideMoat — Mon, 23 Feb 2009 15:16:14 +0000

Thanks for featuring this post, Jae. Recently I’ve really been struck by all the negative commentary about Ebay and used this series of posts to get a better understanding of the business and its value. My conclusion is that Ebay is a great business now selling at an attractive price.

For those interested, I have also posted two net present value analyses of Ebay’s cash flows (here and here), and a relative valuation comparing it to its primary competitor, Amazon.

I welcome any comments, questions, and concerns.

WideMoat’s last blog post..Buffett, Technology, and Moats

By: Alex

Alex — Mon, 23 Feb 2009 15:13:46 +0000

Jae,
Im going to throw this out there. Aren’t you missing ebays biggest assets, its buyers and sellers?
In this case we could simple say their worth 10 billion or the difference between market cap and total cost as calculated above. How would you value them.

Alex’s last blog post..Magic Formula Stocks On The Move 1-04-09