from a macro perspective it seems clear that amazon should one day be worth more than ebay. here’s my reasoning…
i can see how i will still be doing my ecommerce on amazon in five years as they are the walmart of online retailing. they’re the fastest place for me to buy my gifts for father’s day, new babies, i even go to them to buy pro flowers for mother’s day. it’s just more conventient and always seems like a good deal.
ebay is in a tougher spot. as the broker of person to person ecommerce transactions, they are always at risk of buyers and sellers finding each other through other means, like google. i dont see google replacing amazon. i guess they could. google could let you input a credit card. they could ‘host’ the transaction like amazon and then get your ratings like ebay and amzn.
well, my take is that ebay’s market cap of 45 billion has to go down while amazon’s has no reason to drop. on a quick look, it appears that amzn is trading at 32x the high estimate of 2007 earnings with 50% expected growth, while ebay trades for 29x with 30% forecasted growth. i recommended shorting ebay on this blog in the fall when it was around $40 per share. it went up a bit before settling down to $32 now.
i need to understand amzn’s story a bit better but the idea of a paired trade here is interesting to me. and with the share prices almost the same it makes the math easy too:)
anyone have any deeper insights into these stocks?