eBay Inc.EBAY

Morningstar Rating

Stock Research and Analysis

by Larry Witt, CFA

EBay has grown from a small U.S. online auction marketplace into a global e-commerce powerhouse during the last decade. Although the core auction business is being pressured by cyclical and secular headwinds, we believe eBay's fixed-price business and Read more

Bulls Say

EBay is a global e-commerce brand, with a presence in about 30 countries.

The company is solidly profitable, with the overall operating margin remaining north of 20%.

PayPal, which boasts more accounts than Discover DFS and almost as many as American Express AXP, is now accepted by several large merchants, including Dell DELL, Toys 'R' Us, and Southwest Airlines LUV.

EBay sold a majority stake in Skype during the fourth quarter of 2009. This will bring additional cash to eBay's balance sheet that can be allocated to its core business lines or returned to shareholders. Read more

Bears Say

EBay's auction business remains due to secular pressures.

The company is facing mounting competition from Amazon AMZN, Google GOOG, and Yahoo YHOO, which offer alternatives for eBay's users, including competing auctions, online payment services, comparison shopping sites, ad search engines, and independent Web site hosting.

The company's record of capital allocation is mixed. Although some acquisitions have made sense (PayPal, StubHub), others were a destruction of capital (Skype, StumbleUpon). Read more

Strategy

Management is focused on reigniting growth on the core e-commerce platform by emphasizing fixed-price listings. PayPal remains a key priority as the business aims to increase its use on the eBay platform Read more

Management

After leading the marketplace division for three years, John Donahoe took over as CEO in 2008. Before joining eBay, Donahoe was CEO of Bain & Company and at one point had worked for eBay's former CEO Meg Whitman while at Bain. Overall, we hold eBay's Read more

Profile

EBay provides an online trading platform in 37 markets for buyers and sellers of a wide variety of items, such as used cars, consumer electronics, computers, clothing, and Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Weekly Market Wrap: 1/22/2010
Watch more