Publication: Business Week
Publication title: "eBay's
Rhine Gold"
Publication date: 3/27/2006
Brief Summary:
This article takes a bullish look at on-line auction giant eBay (EBAY: sentiment, chart, options) and its success in . The sub-title really sums up the article "Thousands of German startups are using the auction site to sell goods". Germans bought over $6 billion in merchandise on EBAY in 2004 and over 64,000 sellers earn at least 25 percent of their total income via the auction site by selling anything they can. Add it up and is eBay's second largest market behind the . The success in could lead to similar numbers in , , and elsewhere throughout
Europe . The Government in is helping matters also, making it very easy for anyone with broadband and shipping software to begin selling, as the German post office is now offering services tailored to small e-commerce operations.
Contrarian Takeaway:
This article definitely paints a bullish picture for EBAY as and other European countries represent a huge opportunity for continued growth. The only problem I see is that we have a pretty optimistic article, yet EBAY has been a serious laggard so far this year. In fact, the shares are down over nine-percent year-to-date, while other top-rated stocks have been breaking out to new highs along with the market. Obviously this optimism towards underperformance isn't a good sign, and it could signal more underperformance to come. Looking at the quantitative sentiment reveals some more optimism. First off, the firm's SOIR checks in at only 0.47, higher than only four percent of the readings over the past year. This shows us that short-term option players continue to remain bullish even as the shares lag. Next, it would take fewer than four days for all of the shorts to cover their bearish bets - not a huge number, but also not enough to get me overly concerned about a massive short-covering rally on any potential good news. Finally, analysts are more neutral if not a little bearish, as according to Zacks there are eight "buys", eight "holds," and two "sells." Add it up and eBay sports a Schaeffer's Equity Scorecard reading of 3.0 out of 10.0 suggesting the path of least resistance is probably lower. If you're looking for an internet name to play long I'd recommend something like F5 Networks (FFIV: sentiment, chart, options) which better fits our methodology - skepticism towards a fundamental and technical leader.
