Hold on. Let me get this straight: Rick pans eBay's
Rick: Skype me.
First of all, how are you going to tell me that the demand for used cars isn't there? Gross merchandise volume (GMV) at eBay Motors jumped 50% to $12.3 billion over the past four quarters, after growing 66% to $8.2 billion over the previous four quarters. Meanwhile, the rest of eBay saw GMV grow only 32% over the past four quarters to $27.3 billion, after growing 44% over the previous four quarters.
eBay Motors GMV vs. eBay Total GMV
|TTM Ending:||Q2 2003||Q2 2004||Q2 2005|
|eBay Total GMV||$19.3 billion||$28.9 billion||$39.6 billion|
|eBay Motors GMV||$4.9 billion||$8.2 billion||$12.3 billion|
So Rick is right -- eBay Motors has been driving growth, and it's bigger than eBay's next four biggest categories combined. But what's his point?
Looking at the category breakdown from eBay's website, exactly two of the twelve categories eBay tracks have managed to produce sequential quarterly growth in GMV over each of the past thirteen quarters: eBay Motors and the almighty Home & Garden. Not only is eBay Motors driving growth, but it has also been the company's most dependable category. That will only become more true when the Skype acquisition -- expected to be completed during the fourth quarter -- helps buyers and sellers facilitate business, prompting even more growth.
Besides, one man's category dependency is another man's competitive advantage.
You might also recall the discussion I had last year about eBay Motors and the rapidly growing import car scene. After my visit to SEMA Show 2004 in Las Vegas, I wrote how retail sales of aftermarket car parts to the compact performance segment had jumped tenfold, from $295 million in 1997 to $3.2 billion in 2003.
But here's the kicker: An estimated 60% to 65% of all participants in this market acquire their cars used. And if sales of aftermarket car parts are on the rise, what would that seem to imply about the demand for used cars?
Compact performance market growth
Rick said something about the stock losing nearly a third of its value since last December. So what? The stock was overvalued then.
He points to slowing domestic growth, while neatly ignoring the 60% growth in international business -- which is now roughly the same size as the domestic business -- and 52.5% growth in PayPal over the past four quarters. And even on that note, Skype should help improve growth in the domestic business.
But since when is 26% revenue growth a deficiency, anyway? Coca-Cola
I have to sympathize with Rick here, because I know he took the bear side of the argument only because nobody else wanted it. But as any card player knows, if you play bad cards, you are going to lose.
Wait! You're not done. This is just a quarter of the Duel! Don't miss Rick Munarriz's bearish beginning, Jeff's bullish position, or Rick's rebuttal. When you're done, you're still not done. You can vote and let us know who you think won this Duel.