Charles LannoneBay IncEBAYDON'T BUYJun 11, 2014

They report Wednesday. The Gamestop offer has some potential. The strong consumer is gravitating more to ebay. PE is good. Share buybacks are happening. The collectibles category is new and could pay off.

They're focusing on high-ticket, high-margin margins, and if they deliver on that, the market will like it.

Just upgraded. They just reported earnings and beat across the board. The stock was down a little, but is up over 50% this year. Many drivers here: collectibles, precious metals, even cars, consumer to consumer business, great balance sheet and buying back shares.

Strength in certain categories. Actually really big in automotive parts, a $10B industry. Also strong in fashion, refurbished goods. Under the radar, already starting to have a comeback. Will have a resurgence as people look for AMZN alternatives. Yield is 1.33%.

Up 45% this year and still trades at only 12x PE. There will always be ebay, leverage to the consumer and open to AI developments.

EBAY has been trending up nicely over the last year, gaining 49% and paying a yield of 1.69%. EBAY is also quite cheap at a 12.6x forward earnings valuation. Growth outlook is not exciting, expecting revenue growth of 2-3% annually and mid-single digit EPS growth. Recent quarterly results have seen strong EPS growth. Our prior comments are relatively unchanged. We think it is a high cash flow, mature value stock and would not expect it to continue delivering over 45% returns.
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Business model "old" in terms of internet business. Under threat from companies like Meta (Facebook). Better names to select (like Meta). Not sure what catalyst is for growth. Would not recommend buying at this time.