Summary: OVERPRICED
Score: 7/20
MOS: -53%
Share Price: $54
Sticker Price: $35
Is Ebay a good buy?
Ebay was one of the top new tech companies to come out of the 1990’s. They survived the dot-com bubble bust in 2000 and finally started to climb in 2002.
I want to briefly pause and touch on the dot-com bubble. I love talking about historical events related to the stock market because history tends to repeat itself and we can learn from these events.
Between 1995 and its peak in March 2000, the Nasdaq index rose by 400%. If you didn’t already know, the Nasdaq is primarily composed of tech stocks.
Internet based businesses were the new trend and regardless of the financials, people were buying internet stocks based 100% on emotions. There were circumstances when some companies would simply add a “.com” to their logo and the stock would sky-rocket within 24 hours. In 1999 there were 486 IPOs! Typically, there are about 200 IPOs per year.
Some of the stocks that took off were pets.com, webvan.com, etoys.com, flooz.com, and many more.
Have you heard of any of these?
Yeah, me neither.
How does this relate to today?
Speculative investing is driven by emotions. Hope, greed, feelings, and beliefs are what drive these prices up with no foundation of logic. In other words, speculative businesses are usually classified as OVERPRICED within Tykr. Remember when marijuana stocks were the craze two years ago? How about cryptocurrency? These are speculative investments.
Ebay was one of the few tech companies to survive the dot-com bubble but they haven’t innovated over the past 20 years. Sure, the website is easier to navigate but it’s still an ecommerce website where you may buy and sell products.
I like the business model and I’ve used it to buy and sell products but it’s not a repeat purchase platform. In other words, I’m not subscribing to it or spending money on it every month. Most people are in the same position. From an investment stand point, it’s better to invest in businesses, especially tech businesses, that have recurring revenue channels.
With a score of 7/20, this shows the overall financials are too weak. There are many other tech stocks you can find in Tykr that are classified as ON SALE.
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