The rumor mill was working overtime today. Rumors of eBay Inc. (NASDAQ: EBAY) buying Tencent, rumors of Tencent buying eBay China, rumors of Tom.com buying eBay China. All sources referenced Chinese newspapers. So really, who knows.
While today MarketWatch finally reported about eBay China management changes, these are reports we've seen already yesterday morning in the same Chinese newspapers. I was also skeptical and waited to the evening to report on them. People are naturally suspicious. Still, when rumors come from The Wall Street Journal as was the case with Yahoo! and Facebook, they are given higher credence than when they come from obscure newspapers/sites.
I, for one, wish the rumors were true. I wish something was happening in China as something needs to be done there, assuming eBay has serious plans to capitalize on that market.
Also today, Goldman Sachs analysts reiterated their "Buy" rating on eBay, although they reduced the target price to $35 from $54. That's after JPMorgan reiterated their "Overweight" on eBay shares yesterday.
I looked at both reports and tried to find commonalities, which is always difficult since analysts almost seem bent on looking at different numbers and emphasizing different issues. Here's what JPMorgan had to say: "We believe that better than expected revenue growth and improving margins will lead to multiple expansion and relative stock price outperformance."
Here's what Goldman had to say: "...we believe that investments in the first half of the year as well as initiatives in 3Q2006 are positioning the company for a solid 4Q2006." Moreover, Goldman still believes that eBay's intrinsic value is $50-plus but thinks investors would take a while to believe in Goldman's expected growth rate. And I'll leave this at that.
eBay Inc. (NASDAQ: EBAY) shares were up $1.45 or 5.53% to close at $27.67. Rumors or analysts calls, what do you think?
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Reader Comments (Page 1 of 1)
9-27-2006 @ 5:08AM
Alex said...
"Rumors or analyst calls?"
Both. They go hand in hand. You've heard the term 'bull in a China shop'. Lots of noise is made and lots of things end up broken. Other events in the vicinity generally get unnoticed. After all, a 'bear in a China shop' just doesn't sound right. Does it?
The pending LVHM lawsuit does not look good for Ebay, particularly if other brands follow suit. Earlier in the year, French courts have already sided with LVMH in a lawsuit against Google. Although the payout was minimal ($400,000), it was the policy change that Google were forced to implement which could prove the sticking point for Ebay. We could potentially see the eventual removal of entire catagories if the LVMH case is upheld.
http://www.businessweek.com/globalbiz/content/sep2006/gb20060922_888836.htm
Could these 'rumors' and 'bullish' analyst calls be the squeezing of the last of the toothpaste?
Seeing as the recycling of old news articles are the de rigeur at the moment, here's another couple worth pondering over:
http://www.auctionbytes.com/cab/abn/y02/m12/i20/s01
http://www.nysscpa.org/home/2005/405/4week/article69.htm
9-27-2006 @ 7:21AM
Brian Snale said...
I wonder if those analysts are talking up the stock so they can reduce their holdings, because I can't for the life of me see any good in the future of ebay at all. The opposition are continuing to grow in size, and whilst ebay is still the biggest player the others are all getting stronger by the day.
From what you read on the Ebay forums, all is not well in several areas, and whilst the comments may not be from experienced analysts, they do represent the general feeling of worries about eBays future. I wonder if these analysts actually ever venture outside of their ivory towers and spreadsheets, to know what is really going on.
9-27-2006 @ 9:44AM
Ann Lambert said...
It’s an investor’s call, EBay is emerging as an internet sector leader, and investors are pondering which of these internet companies is not in the path affected by the ad declining revenue by big budget clients.
Having recalibrated its infrastructure EBay is poised to excel at Noto “eBay's intrinsic value is $50-plus” along with partnership of all three divisions SKYPE, PayPal and its auction- commerce platform
The rumored “PayPal killer” proved wrong, as the unconfirmed exodus of its CORE listings by unreliability source “Auction Bite” and emerging alternatives treats to EBay auctions.
Now, as the dust settles investors are reassessing EBay’s three divisions’ growths collectively and so far it’s immune from the concerns of an impact by the softening of online advertising.
9-27-2006 @ 3:58PM
steve montefelice said...
i beleive ebay will go to 50 dollars are more, we have christmas coming up, and people do buy alot of goods, we will b ok, just hold on for a few months are so.
9-28-2006 @ 6:34AM
Helen said...
Keep singing off that hymn sheet Ann. We all know the words now!