Sushi Money

** Update: Long position in eBay was closed in early 2008 after company dynamics and policies changed. Our current view is neutral yet may change again in the future if the company fundamentals deteriorate further, or are convincing enough to warrant further investment.**

What will eBay become in 20 years?  Will they still be around in 20 years?  Most definitely.  I suspect they will look a little different however, (maybe even bought out under another brand) and the auction company?  It may still be the core of eBay, but the eBay Universe will look a lot bigger in coming years.    Have you seen the eBay neighborhoods yet?  Pretty cool… only been going a couple of days and already the niche corners are filling up.   I’m not really concerned about metrics that compare slight percentages of growth or loss in auction sales and listings from quarter to quarter.  I think too many analysts focus on such discrete aspects of the company and are missing the Big Brand and potential over time.  For eBay I think we need to focus on year-to-year metrics at a minimum, and consider factors such as brand awareness, economic integration and market penetration.  It’s just not a simple proposition, but I guess you have to start somewhere.  Then again I have a hard time understanding why the market has Amazon (AMZN) carrying a P/E of 129 to eBay’s (EBAY) 40.  Personally I’d rather be on the eBay side of that trade.

     How about new tools and products?  I’ll just say that the eBay Desktop is pretty neat and works very well. It’s what I use for eBay search now- faster, simpler and the search listings are better than they used to be.   eBay is also coming out with a some new tools for users that may prove helpful.  Some of the other eBay products such as Stumble Upon and StubHub are really doing well. I’m not so sure about Kijiji… time will tell.  I’m also not sure about the other stuff, but they seem to be working hard at the eBay house.

Something that never really caught on was the Windorphin campaign. I think it was a cute idea that never really had any purpose- so people wondered what the heck do you do with these things?  What™s it about?   A lesson revisited¦ just because you have a creative idea doesn™t mean it™s a good one.  It might still be, but I™d rather not see a company spending money on stuff that really isn™t going anywhere. The advertising aspect was a little strange.   Of course I had to check it out and make my own Windorphin¦ which, considering my blog™s name is Sushi Money isn™t such a strange thing.   I kind of like the little guy.

Do you know what I would like?  A nice, slim, mobile eBay application for my cell phone.  Among all the other mini apps on mobile phones it would be fun to explore what eBay has to offer.  Might not be easy to make it efficient and usable, but I think they could do it.   Start integrating PayPal Mobile a little more and now we™re really talking.  Maybe they already have it, and I™m just clueless.  But if they took eBay Mobile, PayPal and the Windorphin campaigns?  I think they could do something cool¦ I™d use that icon above for a mobile signature or for other eBay stuff.  Lots of sellers do that now.

     So where is eBay falling down?  Where do they need more focus?  What can they do better?  You tell me¦   One area they need to focus on (heck, countless internet and brick & mortar companies need to focus on), is the changing demographics across the nation (and world).  Over the next 30-40 years the U.S. will become a nation focused on the needs of older adults, especially the retiring Baby Boomers.  This is a huge market for retailers, and those companies that leverage their brand toward helping older adults use or access services, information and products will see enormous growth.  And that also goes for cross-cultural expansion.  We are equally becoming a more diverse society.  

     I like the company enough that I invested in it last year, and hope to stay with it for a few years at least.  I haven™t seen anything to be concerned about over the long-term.  Are valuations attractive today?  For a long-term buy I believe they are.  But like the economy and the stock market, eBay will trend up and down over time, sometimes with great volatility.  Last year I considered it a value play in the technology sector.  It™s more fairly valued today.  Say what you will about eBay, but there™s something electric about the company and their vision from my perspective.  What’s yours?

Full Disclosure: I own eBay stock at the time of writing.

No comment - Post a comment

« Estate Planning and Family Wishes | Fundraising for Schools and Kids: Is it Worth It? »