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Ebay sees $3B revenue
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September 20, 2000: 6:29 p.m. ET
Online trading site sees revenue growing 50 percent per year
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NEW YORK (CNNfn) - eBay Inc., the world's largest online auction site, on Wednesday held an analyst meeting at which it announced a revenue goal of $3 billion in 2005, implying revenue growth rates approaching 50 percent per year until that date.
"We are excited about eBay's long-term vision," said Meg Whitman, eBay's president and CEO, in a statement issued Wednesday. "We intend to accomplish our long-term revenue objectives while maintaining profitability as a cornerstone of our strategy."
During the meeting, eBay (EBAY: Research, Estimates) executives restated the company's ongoing commitment to profitability and returns-based investment. The company repeated its goal of achieving gross margins in the mid-80 percent range and operating margins of 30 to 35 percent before 2005. In a comprehensive research report on eBay written last June, Merrill Lynch analyst Henry Blodget forecast that eBay's gross margin would be 73.4 percent this year and 75 percent in 2001.
EBay's bullish forecast sent its stock soaring $10.88 to $76.56, a 16 percent gain. Even after that gain, however, the company's stock is still 40 percent below its 52-week high of $127.50 
While eBay's target of $3 billion in revenue in 2005 is aggressive, analysts who follow the company say it's within the realm of reason.
"We can imagine an aggressive case calling for $2.7 billion of revenue by 2005 and $2.34 in earnings per share," Merrill's Blodget wrote in his June report on eBay. The Merrill analyst sees the company's revenue growing to $403 million this year from about $225 million last year.
The world's garage sale
EBay is essentially the world's garage sale, enabling consumers to list items they have in their homes for sale or to buy almost anything under the sun except for firearms, illegal drugs, human body parts and remains, stolen items and a few other verboten things. Because eBay never takes possession of the items, it has no inventory. Consumers list the items on their own and are responsible for closing their own transactions. This business model has made eBay one of the only profitable consumer-oriented Web sites.
For the quarter ended June 30, eBay reported revenue of $97.4 million, a 97 percent increase over the $49.5 million reported for the same period last year. Consolidated net income for the quarter was $11.6 million, or 4 cents per share.
EBay users sold $1.3 billion of goods through the site that quarter, a 108 percent increase over the second quarter of 1999. The site's 15.8 million registered users conducted 62.5 million auctions during the period, eBay reported. The average price of an item sold over the site is about $21, so it's not exactly Sotheby's or Christie's.
While the company's revenue has grown rapidly since it began in late 1995, its auctions still account for only a small percentage of collectibles and household items sold around the world.
"With eBay's current share of the collectibles market at approximately 2 percent and its share of the practicals market at about 1 percent across all categories, we see tremendous opportunity to extend the platform," Jeff Jordan, senior vice president for eBay U.S., said in a statement.
eBay also said that it expects to be in 10 countries by year-end 2001 and 25 countries by year-end 2005, representing the majority of online users and e-commerce revenues outside the U.S. 
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