Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

eBay Inc (EBAY): Should You Invest in This Company Ahead of Results?

Page 1 of 2

It is quite certain that a lot of individuals who have aspired to run an independent business must have executed their first sale on eBay Inc (NASDAQ:EBAY). It is like a mini platform for entrepreneurs to test their selling skill, which is indispensable for doing any business. The company’s business model is so canny and unique that it has carved out a separate space for itself in the world of retail. Being just a platform for connecting buyers and sellers, eBay is spared huge inventory cost, cost of building infrastructure and staffing expense.


Strong and Unique business model

The company has a rock solid business model, and with the earnings release right around the corner, let’s analyze if it is a good investment. As I mentioned, eBay Inc (NASDAQ:EBAY)’s business model allows it to operate on comparatively lower costs than traditional brick and mortar retailers and e-retailers. For the first quarter of 2013, the company increased its GAAP operating margin to 21.3% from 19.9% in the year ago quarter. The sluggish recovery in global economy has affected consumer spending in huge markets like Europe, resulting in loss of revenues for big retailers like Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT). A low-cost model powered by flawless customer service has delivered for eBay, whose share price has risen approximately 32% in the last 12 months.

PayPal is defining growth

The company’s next big strength is PayPal, which is growing continuously, ahead of a few other players who provide similar payments platform. In the year 2012, PayPal’s active account growth increased to 15% and finished the year with 123 million registered accounts. As many industry experts and analysts have claimed, mobile is the next big revolution, which will affect a number of sectors, including retail. eBay has already realized the significance of mobile and executed on its strategies effectively. A few months back, the company restructured its mobile group and released a number of updates to its apps.

Significance of Mobile

As per data, eBay Inc (NASDAQ:EBAY)’s mobile apps attracted 4 million new customers in 2012. The company has designed its apps in a way so as to complement a user’s shopping experience with the motive of promoting mobile as a mainstream source of revenue. Even PayPal mobile has delivered a commendable performance by handling $14 billion in payment volume. This news report in 2012 celebrates 100 million eBay app downloads along with other achievements in M-commerce. An expected surge in e-commerce sales presents a very lucrative opportunity for eBay’s revenue growth from Marketplace and PayPal.

Versus Amazon (NASDAQ:AMZN)

If one of the titans in the e-commerce business is eBay Inc (NASDAQ:EBAY), then the other is definitely, Inc. (NASDAQ:AMZN), a brand that has taken away a major chunk of business from traditional retailers. Over the last decade, it has branched out into different segments like music, games, e-readers etc. The company’s stock has gained over 30% in the last 12 months on the back of strengthening business momentum, dedicated customer service and newer flourishing segments. Amazon has often been criticized as an overvalued stock and quite frankly, it enjoys reasonable premium. Consider this, Amazon’s current PBV ratio is around 15.3 whereas eBay’s PBV ratio is around 3.88.

Amazon is quite a perplexing company because it is a pretty high valued stock with not so strong financials yet the market has not given it any big correction. While, some of the technical parameters seem to be out of line for this giant, its robust business model and principles have compensated well.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!