PALO ALTO, Calif. (CNN/Money) -
Thank goodness for eBay. If it weren't for the worldwide online auctioneer, there might be nothing good to say about the Internet economy or Silicon Valley of the last few years.
What's more, its stock, while stalled north or south of the $50 mark for about two years, has been the great salvation for tech-stock investors. Just check out what piddling performance means matched up against the Nasdaq. You wouldn't have made a bundle buying its shares, depending on where you jumped in, but you also wouldn't have lost much.
What's more, listening to what eBay (EBAY: up $0.89 to $63.40, Research, Estimates) had to say at its analyst meeting Wednesday, you've got to love this company even more. It started out as a phenomenon, the one Internet company with a solid business model, profitable from the start.
Today, it is professionally run, printing money and focused on how to make its business even better. The operational questions about eBay are about which countries and products are next, not whether the Web site has enough servers.
The gut check, then, is whether or not it makes sense to own its shares now and for years to come.
eBay always has been vastly overvalued. It was worth billions when its sales were miniscule. Today, with a market capitalization of about $19 billion, the company trades for about 78 times what analysts expect it to earn this year.
That's high by almost any measure. And yet, the stock is kind of like an overpriced house in a highly desirable neighborhood: You know it's inflated, and yet you don't see what will bring the price down.
Chief Operating Officer Maynard Webb -- the technologist who saved eBay from being an embarrassment several years ago when its site kept crashing -- spoke Wednesday about the company's ability to "scale seamlessly forever."
That may be a bit of hyperbole, but as eBay jams more and more auctions onto its site, its costs actually do come down. He reported that the company's cost per listing has fallen from $1.45 to $1.25 as it economizes on technology even as listings grow exponentially.
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The problem is that given its valuation, everything eBay's management does is focused on maintaining momentum to justify the stock price. Is eBay a good investment at $63? Like that awesome house, it probably won't let you down too much, especially with the caretakers doing such a good job of constantly sprucing up the place. But will it be the stock that lets you buy the biggest house on the best block in your town? That already happened -- to the investors who bought around the time of the company's IPO in 1998.
eBay, like the Internet economy, is all grown up. A survivor, to be sure. And yet not your best candidate for getting rich in the stock market.
Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.
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