Sushi Money

Right upfront, I own eBay stock.  Why?  Maybe because I didn’t buy it back in 1998 when I thought it was such a great company…   I remember investing in everything BUT eBay back then.  More to the point, why did I buy eBay a few months ago?  Because I think the last six months have presented an excellent buying opportunity on the stock for the long-term.  There are lots of folks trading the stock and making a pretty good living, but I really think this is a terrific investment for the long portfolio- at least at present valuation levels or lower.  If the market were to correct severely in the near-term, I might look at additional buying opportunties as well.  Why?  Because eBay has been around long enough to establish a rare global brand with few competitors to really challenge it. 

Vishesh Kumar from the Street.com has written a balanced review titled eBay a Haven in Hard Times with a focus on valuation, competitors, challenges and future growth, and I won’t rehash that here.  From my perspective, the challenges to eBay are more about what it does or does not do well as a company.   There has been lots of aggravation by stalwart sellers over changes to eBay’s listing forms, as well as fee increases that some business models are challenged to absorb.  I have never personally sold a single item on eBay, so my impressions are from reading media and user comments.  But I have been an eBay auction buyer for over 8 years, without a single real complaint.  All of my experiences as an eBay buyer have been positive, and I’m a very careful shopper.  My concerns?  If anything, I believe eBay has underestimated the “user experience” impact of the changes it makes to the site over time.  Over the past couple of years, I have found it more and more difficult to find something I am looking for.  There is so much garbage that somehow relates to what I’m looking for that I can’t separate the trash from the treasure.  After a while it all begins to look like trash and I simply give up- there’s simply “too much” to sort through.  I think that is the greatest risk to eBay’s business model… not keeping it simple, clean and effective for the user.  It shouldn’t take a PhD to figure out how to find something you want to buy, especially from the company that practically invented the online auction experience.  To eBay’s credit, they have tried to separate the real auctions from the eBay ‘Stores’.  It’s still not as usable as I would like however.  

Yet with all the challenges, eBay pushes on… sellers sell products and buyers buy them.  As Vishesh Kumar points out, eBay should do well in harder economic times.  If the economy really goes south, isn’t that where you see more garage sales, advertisements, people trying to get rid of stuff?  At the same time, more prospective buyers are trying to cut costs and looking for ways to do that.  eBay fits the mold for me, in good times and bad.  I think the company can work through the issues facing them and continue to grow.  In 10-20 years they will either be an amazing growth story, or an amazing story of demise.  I believe in the growth story…   Oh, one other thing.  One of these days I think eBay will start paying a dividend.  It may be two, five or ten years down the road, but if they’re going to take their place among the corporate giants they need to remember investors, small and large.  There’s a whole bunch of folks that prefer and depend upon dividend stocks, and I think companies that pay dividends will become increasingly important in the years ahead.  Most of my portfolio includes dividend stocks…  eBay is the exception.   I’m hoping it becomes exceptional.

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