Forget about the split between Britney and K-Fed this week. The real breakup is taking place in our Motley Fool CAPS community, where investors like you and me can't seem to agree on the merits of eBay (NASDAQ:EBAY).
Is its partnership with Baidu.com (NASDAQ:BIDU) in China enough to make it a force in the world's largest country? Will Google (NASDAQ:GOOG) Checkout eat eBay's PayPal for breakfast (and pay the tab, electronically)? Did the company overpay for Skype?
This week I once again turn to the CAPS community to see what they think about a stock that is making waves on Wall Street.
Be my little eBay
As one of the oldest Motley Fool Stock Advisor newsletter recommendations, eBay has plenty of followers around Fooldom. Let's check in with what some of them have been saying in their CAPS pitches.
TMFBreakerDave -- 4/13/06
This always-expensive-looking stock has always beaten the market for me via the long term. When I first bought in 1999, my shares doubled within 6 months. By 2002, post-Nasdaq-crash, I had given it all back, having returned to my cost basis. From that point on, EBAY stock has been a winner and now judged over the 7 years has almost tripled and is well ahead of a flat market. I think that's the way you have to approach stocks like these, sometimes. You're paying up in the short term for something that looks overvalued, may sell off (will, badly, sometimes), but if you hold an excellent industry leader like EBAY, as profitable as it is, you are rewarded. You beat the market. Just watch.
Har1en -- 8/21/06
eBay's current valuation shows dark expectations about their future growth prospects. I believe that this international auction vendor has some great years left ahead of it, and it will undoubtedly continue to grow into areas we would never expect. Not all will see the success of the PayPal acquisition, however, Meg and her management team have impressed me for years and I believe in and use their services. The recent share price decline on this amazing business has made this an easy pick for beating the S&P over the long term.
Adibmoti -- 9/16/06
Best of breed company in online auctions. Great brand recognition. Stock has crashed this year due to worries on increased competition, higher fees. Stock will recover once it reports good results in a quarter or two.
DancingNancies -- 8/23/06
eBay is one of the few businesses that has a competitive advantage in all major categories: product differentiation, scale/leverage, network effects, and switching costs. The only other company I can think of with a strong advantage in all four categories is Microsoft (NASDAQ:MSFT).
eBay is currently selling for about a 4% owner earnings yield (after subtracting the net cash on the BS). In my view, that is a very attractive price considering the moat and dominance of eBay.
Kapilstocks -- 9/6/06
Warren Buffett style. Buy it and forget it if you are going on vacation for 10 years.
If Wal-Mart (NYSE:WMT) can generate such growth rates over years then I guess that eBay can expand margins and grow internationally.
Waiting at the dock of eBay
Naturally, not everyone is head over heels in love with eBay. Even though just 130 of the 1,028 investors that have an opinion on the company in CAPS feel that the shares will underperform the market, they can get pretty vocal about their displeasure with the online marketplace giant.
Let's see what some of your more bearish fellow investors had to say about eBay on CAPS:
ezSteveG -- 9/6/06
The online auction market is totally saturated. Offline outlets have failed to grow the market. This business is mature and fading.
taylorrobertj -- 9/6/06
eBay has long been below its highs of old, and this trend will continue. They have raised auction prices again and alienated many of their most prominent sellers. Instead of making all of their customers happy, they continue to line their own pockets. Unless they get back to their original purpose of creating a simple marketplace that benefits everyone, both buyers and sellers, this stock will continue to decline.
shivc1 -- 10/22/06
EBAY, despite the recent earnings surprise, will continue to cede market share to Google and Amazon (NASDAQ:AMZN). The recent earnings surprise was due to better than expected performance by Paypal, which Google checkout has directly trained its guns on.
International segments face intense competition from local websites, and are unlikely to contribute signifantly to EPS. P/E of 41 is very high considering that growth of 25% is unlikely.
Guinn3666 -- 9/25/06
Company is not going to be able to continue to grow at fast pace. Once market gets used to 20-25% growth then the P/E will contract to lower levels.
Great business but just not the right price to own it here.
Irelandsown -- 11/2/06
I'm worried about the long term prospects for eBay's core business. They consistently have scared off their big sellers by raising fees. A number of the third party developers that got their start by helping people sell on eBay are diversifying to allow eBay Sellers to sell elsewhere online while eBay's efforts to diversify haven't really caught on with the buying public (eBay Express, eBay ProStores).
They continue to be plagued by people getting ripped off. More and more people are using Craigslist (for free) to rid themselves of wears that they used to sell on eBay. With rumors of them leaving China, one has to believe that they are struggling to capture the market share and revenue they want or need to continue to be successful there.
Next few years, I don't like.
Meg is "gem" backwards, so is Meg a backwards gem?
Will CEO Meg Whitman turn eBay around into a darling stock again? The challenges are real, but the company continues to inch forward. That's the right direction, of course, but I just don't know if it will be fast enough. The company's model has been exposed overseas (eBay bowed out of Japan a few years ago and is now struggling in China). Stateside growth has been running historically sluggish. PayPal has been a great driver for the company but competitors loom.
I guess you can't have the perfect stock. One can argue that eBay is priced according to its warts but I don't know if I want it in my portfolio just yet. The majority of the CAPS players would disagree with me on that, but that's the joy of an interactive community.
You too can lend your voice to the discussion by joining the fray and sharing some thoughts of your own on CAPS. Just know what you're getting into before you hit that "Buy It Now" button on your online broker's order page.
Motley Fool CAPS is a new community-driven experience where individual investors pool their knowledge to seek out superior stock ideas. Are you up for the challenge? Go ahead and give it a shot .
eBay and Amazon are Motley Fool Stock Advisor recommendations. Wal-Mart and Microsoft are Inside Value newsletter selections.
Longtime Fool contributor Rick Munarriz is currently ranked 9,328 out of the 12,621 active CAPS players. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy .
