In my previous post where I detailed the Wall St. reaction to eBay’s Q2, in the SeekingAlpha disclosure, I noted that I am now long eBay.
I’ve already received some questions on this and wanted to clarify. After reading all of the notes and looking at the data, I found Scott Devitt and Shawn Milne’s view somewhat compelling. I can see the argument that Motors softness is dragging down/masking many metrics and I do think the selling is overdone. I also think many of the changes eBay is making are directionally good (many need tweaks of course).
The right changes?
Back in 2007, I outlined what I thought there are 3Fs that eBay needed to work on:
From my perspective, eBay is making good strides on Finding+Fees. I’d like to see much more around Fraud so I’m waiting on that one. Thus I agree with Devitt that eBay’s probability of success is increasing (80% seems a little over-optimistic, but it’s definitely heading over 50%).
I’m also intrigued (probably a subject for a longer post) to see if eBay can pull off bringing some really good branded sellers (along the lines of buy.com) to the site. The positives (selection, buyer experience, etc.) of these sellers outweigh the negatives if eBay can manage to keep the smaller seller happy while slotting in some IR500 type retailers.
I decided to only invest about 33% of what I was originally thinking of doing here and average into a position and get more aggressive if it goes down to do a little DCA. I’m particularly concerned that eBay could have another down-jag if Amazon reports their 3P business is accelerating (highly likely given eBay’s GMV growth rate). I pulled the trigger today at around $24 and if we see $23 or $23.50 over the next couple of weeks I’ll probably round out the position.
Feels like 2002
I haven’t been long eBay since 2002 so this is definitely a blast from the past for me, and it will be interesting to see how it plays out.
SeekingAlpha disclosure: Long Google and eBay