Amidst a turbulent six-month period for the financial industry, eBay Inc., the Tufts alumni-owned online auction site, announced that the current US economic decline has yet to affect business, and that the company continues to thrive.
And after an upbeat profit report from Amazon.com (AMZN) yesterday, eBay's stock, along with that of most other technology companies, rose higher. Shares of eBay Inc. (EBAY), a member of the American Stock Exchange (ASE) Internet Index and the NASDAQ 100, gained $2.48, or seven percent, to rise to $37.98.
"Despite the turmoil around us, we continue to focus on expanding our customer base," said eBay CEO Meg Whitman, at the eighth annual Internet World Spring 2001 conference in Los Angeles, CA.
Derek Brown, an analyst at W.R. Hambrecht, agreed that eBay has been relatively untouched by both the general slowdown in the economy and the sluggishness in the advertising market. "eBay's business seems to be thriving right now," he said. "Their business is expanding, not contracting. And neither Yahoo! nor Amazon.com could mount much meaningful competition for eBay."
The ASE Internet Index was up 2.73 percent yesterday, mirroring advances in such Internet companies as eBay, Check Point Software Technologies (CHKP), and Verisign Inc. (VRSN). The tech-rich NASDAQ Composite Index gained 13.15 points, or 0.76 percent, to 1,733.5.
"Despite the recent failures of the Internet, the Internet is not dead," Whitman said.
Throughout the year, analysts have had to revise their expectations of eBay's earnings and revenue. Pacific Crest said yesterday that it believes eBay will beat analysts' estimates of first-quarter earnings for 2001 by two cents per share. The firm also raised its quarterly revenue estimate for the online auctioneer from $150 million to $160 million.
Other analysts, such as Deutsche Bank. Alex Brown analyst Jeetil Patel, see a positive outlook for eBay. Patel, who has a 12-month target price of $60 on the stock, affirmed a "buy" rating on shares last week and expects an upside to the revenue expectation for the company for the first quarter of 2001. "We reiterate our buy investment rating on shares of eBay and recommend that investors add to positions at current levels," Patel said.
In an attempt to simplify its pricing format, eBay has introduced the "Buy It Now" feature, which allows the buyer to purchase goods immediately at a fixed price. The auction site acquired Half.com, a fixed-price seller of books, music, movies, and games, and it has instituted online payment by credit card through Billpoint.
"I'd say it's pretty easy to bid for items on eBay," said sophomore Christopher Goodchild, an economics major. "The only difficulty arises when other people bid above you and you don't know how much they bid until the end... and you lose out on the item."
Founder and Chairman of eBay Inc. Pierre Omidyar graduated from Tufts in 1988 with a BS in computer science, and now serves as a member of the Tufts University Board of Trustees. He and his wife Pam were involved in the formation of the University College of Citizenship and Public Service (UCCPS).
The couple donated $10 million in January to the UCCPS that, among other things, created the Omidyar Scholars program, which encourages students to combine successful careers with active participation in their communities. The couple has said they would like to apply their values from the business world to the philanthropic world through the UCCPS program by implementing the non-profit Omidyar Foundation.
A ceremony last November recognized the Omidyars for their achievements in both business and philanthropy.
For the fiscal year ending Dec. 31, 2000, eBay's revenues rose 92 percent to $431.4 million. Total net income was $48.3 million, up from $9.6 million. Revenues reflected continued growth in the number of users and listings. Earnings also benefited from improved operating margins. The company raised its revenue expectations for 2001 based on its acquisition of Internet Auction, Korea's largest auction site.
