Dueling Fools: eBay Bull Rebuttal

Release the hounds! eBay's (Nasdaq: EBAY  ) growth is slowing!

I don't mean to poke fun. Well, OK, yes I do. It's just that, unlike my pal Rick, I don't see a reason to panic. That's because I've run the numbers.

According to my math, today's price assumes that eBay's owner earnings growth will slow from north of 20% to just less than 16% annually over the next five years. I suppose that's possible. But analysts say eBay will boost its bottom line by at least 21% a year through 2012.

What's more, over the last 12 months, the auction king juiced OE by about 25%. And that's after accounting for stock options.

See my point? There's no easy answer with eBay. It may be expensive. It may be cheap. We really can't know for sure. So let's review what we do know:

  • Amazon (Nasdaq: AMZN  ) and Overstock (Nasdaq: OSTK  ) aren't even within spitting distance of eBay's lead in auctions.
  • Google (Nasdaq: GOOG  ) and Craigslist are threats, but they've yet to keep eBay from acquiring active users.
  • Thousands of people make their living from eBay, including the Professional eBay Sellers Alliance, which is global and does more than $400 million in annual revenue via the site.

In short: eBay is still very much the king of the auction business, and it has a growing legion of millionaires invested in its continued success. Do you really want to bet against that? I wouldn't either.

Wait! You're not done with this Duel. Go back and read the other arguments, then vote for a winner.

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Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Get the skinny on everything Tim is invested in by checking his Fool profile. The Motley Fool's disclosure policy isn't for sale.


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