2 Major Fears Surrounding Google Inc (GOOG), Amazon.com, Inc. (AMZN) & eBay Inc (EBAY)

The second big issue affects the company’s Marketplaces business. With Congress talking about allowing states to determine who must collect sales taxes, if this change occurs, larger eBay sellers are likely to see a decline in sales. One of the reasons customers shop online today is to avoid sales taxes. While better prices sometimes are available online, that isn’t always the case. In fact, more often than not, pricing is very similar until you get to the sales tax issue. If states are allowed to define sales tax collection on a broad scale, both eBay and Amazon’s sales will suffer.

So what do you do?
Investors need to understand the risk created by a potential sales tax on Internet purchases, and the slowdown in eBay’s PayPal division. The good news is eBay sells for no where near the P/E ratio of Amazon.com, Inc. (NASDAQ:AMZN), but the company’s growth rate is also much lower.

Google Inc (NASDAQ:GOOG) and Walmart strangely enough could benefit from a sales tax on Internet purchases. Google’s main business is advertising, and if traditional retailers benefit from a more level paying field, they would theoretically have more money for advertising. Walmart is already competing effectively with online retailers, and a level playing field would only drive more traffic into the stores.

The good news for eBay Inc (NASDAQ:EBAY) investors is, even with these challenges, many smaller sellers wouldn’t be affected by sales taxes. In addition, at under 19 times projected earnings, eBay is still in line with their competition. Investors were treated to a very good earnings report this quarter. In the future, how things play out with sales taxes and the growth of PayPal will likely determine the company’s fate.

The article Huge Growth Could Be Derailed by Two Big Worries originally appeared on Fool.com.

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