Under these circumstances, eBay achieves classic value investment criteria. In particular, eBay generates a lot of cash but maintains a low stock price.Read more
Does eBay Really Have to Compete with Amazon?
Shrewd value investors will ask the above question because a strong case can be made that eBay does not really compete with Amazon. eBay sells used items through auction and discounts to a select clientele.
eBay has become a true value investment because the company has proved it can survive and perhaps thrive in the age of Amazon. One reason why eBay makes money is by not competing directly with Amazon.
The volume of payments processed by Venmo increased by 154% between first quarter 2015 and first quarter 2016, RE/CODE reported. Venmo processed $1.26 billion worth of payments in first quarter 2015 and $3.2 billion in first quarter 2016. That’s an increase of $1.64 billion in just a year, and PayPal has not even enabled the use of Venmo for retail transactions yet.Read more
The real danger for eBay here is that sellers will leave and take inventory and revenue with them. Having less inventory will mean fewer customers and fewer sales. That means eBay’s market share will shrink over the next few years even though the company will remain profitable.Read more
It looks as if eBay Inc. (NASDAQ: EBAY) might not be able to survive without its cash cow, PayPal Holdings Inc.Read more