Malaise At eBay and Beyond
eBay (EBAY) won a Supreme Court victory in its patent case, and it announced a deal for free PC-to-phone calling on its Skype subsidiary. Investors never liked the Skype acquisition and clearly preferred that eBay stick to its knitting. This deal indicates Skype isn't doing well, and predictably traders are focused on the negative. eBay has been on a skid all year, and now it's below its April 2005 low at around $30.50. In the process it hit my stop on my last remaining shares.
I was an early adaptor of eBay, long before it went public, even before they started charging for lots under $50. As a seller on eBay I'm very sorry that they have a monopoly on the on-line auction business, and I know how incredibly difficult it is to do anything about it. Yahoo! and Amazon.com have tried to challenge their monopoly head-on and failed miserably. There have been hundreds if not thousands of guerilla operations trying to chip away in niche markets (see http://www.stamphead.com/ for an example) but I don't know of any that have created a viable alternative. I absolutely despise eBay's subsidiary PayPal, which gouges payees. Again I have tried to find viable competition and can't. http://www.bidpay.com/ gouges the payers, and Western Union isn't safe for strangers.
Since I can't beat them, I joined them by buying eBay stock, and from that point of view I love their wide moat, to use Motley Fool's terminology. I considered it my ultimate core holding, but in 2000-2002 I learned never to ride down a stock forever, so the last remnants of this "core holding" are out the door.
I haven't done a scientific study of this but it seems to me every darling of the 1990's is being shunned by the stock market. No matter how successful the company, traders seem to be pricing in major negative developments, and their charts look bad or flat. The iconoclastic reaction is to keep an eye on this group, because the ones that survived this long past the bubble aren't likely to go away. It might take a month, a year, or three years for anything to happen, but opportunities are being set up here among these fallen angels, and I'm sure it would be a mistake to spend 100% of my time and energy looking for oil and metals plays and miss the action in this group.
Posted at 1:40 p.m. Eastern time.
I was an early adaptor of eBay, long before it went public, even before they started charging for lots under $50. As a seller on eBay I'm very sorry that they have a monopoly on the on-line auction business, and I know how incredibly difficult it is to do anything about it. Yahoo! and Amazon.com have tried to challenge their monopoly head-on and failed miserably. There have been hundreds if not thousands of guerilla operations trying to chip away in niche markets (see http://www.stamphead.com/ for an example) but I don't know of any that have created a viable alternative. I absolutely despise eBay's subsidiary PayPal, which gouges payees. Again I have tried to find viable competition and can't. http://www.bidpay.com/ gouges the payers, and Western Union isn't safe for strangers.
Since I can't beat them, I joined them by buying eBay stock, and from that point of view I love their wide moat, to use Motley Fool's terminology. I considered it my ultimate core holding, but in 2000-2002 I learned never to ride down a stock forever, so the last remnants of this "core holding" are out the door.
I haven't done a scientific study of this but it seems to me every darling of the 1990's is being shunned by the stock market. No matter how successful the company, traders seem to be pricing in major negative developments, and their charts look bad or flat. The iconoclastic reaction is to keep an eye on this group, because the ones that survived this long past the bubble aren't likely to go away. It might take a month, a year, or three years for anything to happen, but opportunities are being set up here among these fallen angels, and I'm sure it would be a mistake to spend 100% of my time and energy looking for oil and metals plays and miss the action in this group.
Posted at 1:40 p.m. Eastern time.
posted by Houyhnhnm | 10:36 AM
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