Note: This page will be updated periodically. For current information, please refer to eBay's financial profile.
eBay is the world's premier (and the world's largest) online marketplace. Today eBay hosts retail and wholesale transactions on websites in 27 countries and serves buyers and sellers in many, many more around the globe, to the tune of tens of millions of transactions every day. eBay was founded in 1995 by a 28-year-old Internet entrepreneur named Pierre Omidyar. Today eBay is headed by CEO Meg Whitman, who came to eBay from FTD in 1998. Taken public in 1998, eBay's market capitalization is currently some $45 billion.
eBay Today
Anyone who has invested in eBay stock over the last few years probably knows that eBay's position in the Internet marketplace is rapidly changing. eBay's 1998 IPO occurred during the fabled "dot com bubble" years and was influenced by many of the same forces that made other technology and Internet IPOs so (in)famous. On the first day of trading, the $18 per share target price gave way to an opening price of $53.50 and eBay's revenue growth has stayed more or less continuous since then, staying percentage-wise in the 30s and even venturing at times into the 40s—enough to make any investor smile.In recent quarters, however, things have slowed down a little. Quarterly year over year growth is now at just over 30 percent and shows a downward trend—still excellent, but not quite as stratospheric. Some of this is due to increasing competition from eBay competitors, including Google (worldwide but especially in North America and Europe) and a number of alternative auction houses across Asia and the Pacific Rim. In some circles, people are talking as if the slowing of growth and the maturing of eBay as a company and stock mark end times for the company. Not so.
In recent years eBay CEO Meg Whitman's strategy has been to continue to strengthen eBay's core auction business while at the same time to diversify eBay's business model and holdings as a hedge against competition in the online auctions and ecommerce market. This strategic and markets growth has included a number of investments and acquisitions—big names that today are also eBay. You may have heard of some of them:
- Skype—The wildly popular Skype VOIP (voice-over-internet-protocol) service is eBay's largest acquisition to date and one of its most recent, purchased in 2005 for approximately $2.6 billion. Whitman's vision for Skype is as a communications hub not just for Internet customers looking for alternatives to traditional telecom packages, but for eBay buyers and sellers, who will eventually be able to interact securely and anonymously by voice. She also sees a future in which the forthcoming Skype subscription charges will be cleared primarily through PayPal.
- PayPal—By now, nearly everyone realizes that PayPal is now an eBay company, picked up for $1.5 billion in 2002 and a natural match: the vast majority of eBay transactions involving online payments at the time used PayPal, and this remains the state of affairs today. True to Whitman's vision, PayPal has also grown to become the premier payment system for ecommerce across the Internet, second only to direct credit card transactions and safer as well. An increasing number of etailers and even brick-and-mortar stores accept PayPal payments today.
- Craigslist—In 2004 eBay paid an undisclosed sum to acquire a 25 percent interest in Craigslist, becoming its largest single shareholder. eBay has kept a low profile vis-a-vis it's ties to and influence on Craigslist, but with the classified service's growth going through the roof and the classified marketplace becoming more important online in general, investors should see this as a strong asset with big upside potential for eBay.
- Half.com—Half.com, acquired by eBay in 2000, represents eBay's move into the online used media market. Half.com was a rising star in and in many ways the creator of this market which has now been joined by the likes of Amazon.com, among others. Half.com remains a perennial favorite amongst students, bibliophiles, game enthusiasts, film buffs, and others in seeking to buy used media products at reduced cost. Because these types of products are commodity priced and often have a long shelf life before being purchased, the alternate sales model that Half.com represents is both appropriate to its market and does not compete directly with eBay's core auction offerings.
- Rent.com, Shopping.com, Prostores—While not as monumental in scale as the aforementioned transactions, eBay has also diversified its retail and real estate businesses with Rent.com, Shopping.com, and Prostores, which together complement eBay's existing eBay Motors, eBay Real Estate, among others, in retail beyond the commodity and consumer goods market.
If together these acquisitions paint the picture of a company in the midst of steady and continued growth, they should—eBay remains the premier online auctions and retail space and is poised to continue along this trajectory for the forseeable future. eBay's major threat at the moment is Google, also rapidly expanding and enjoying market-leading growth. eBay's relationship to Google is a troubled one, as eBay relies on Google's advertising model and market reach for its continued success even as Google continues to enter market niches in which eBay products already exist—for example, classified ads and online payments.
Despite these challenges, prospects for eBay in the future look bright, as eBay growth continues to be strong and eBay's recent acquisitions continue to pick up financial steam and Internet traffic as well.
