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EBAY Company Report 2011F-11.29

EBAY Company Report 2011F-11.29 - EBAY Inc(EBAY United...

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EBAY Inc. (EBAY) United States E-Commerce/Services Price (11/28/2011) $29.66 Market Value ($mns) $40,959mns Ebay 2011 Price Earnings 20.5x S&P500 2011 Market PE (Dec.) 11.6x Company Type Industrial Manufacturer/Service Valuation: $20.38(-33%) Model: Intrinsic Value Watch List Recommendation Add Value Recommendation Hold Investment Thesis: Ebay (ebay) is an ADD. Ebay would experience benefits from rapid growth in online sales and accelerating growth in core non- U.S. markets including Germany, Australia, and China. EBay’s business model, which requires no inventory and is not capital intensive, generates substantial free cash flow. However, fluctuations in buyer activity levels, spending levels, or other behavior patterns with respect to eBay, PayPal, and other eBay properties can hamper eBay’s growth. Fierce competition in the retail/e-commerce, online payments, and communications sectors also poses competitive threats to Ebay’s dominance. These factors contribute to the recommendation of ADD with a potential to buy at $20 range. Background: EBAY, incorporated in May 1996, brings together buyers and sellers on a local, national and international basis. It provides online marketplaces for the sales of goods, services, as well as other online commerce, or ecommerce,
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