EBAY

E-commerce Remains in Secular Expansion

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Thursday brought a plethora of news from the e-commerce space. First, Bloomberg reported that Amazon (AMZN) is raising prices on Prime from $79 per year to $99 per year. The company was quick to note that the Prime Fresh membership fee will remain unchanged at $299, as it continues to test pricing thresholds in the marketplace. We don’t expect much customer defection as a result of the price hike—and especially nothing like that which happened to Netflix (NFLX), which lost hundreds of thousands of customers when it raised prices in 2011. Amazon’s price increase at Prime was necessary, in our view, as it faces rising content (movies) and shipping costs. With more than 20 million US Prime members, the pricing … Read more

Carl Icahn Keeps Pressure on eBay’s Board; Shares Continue to Rally

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On Wednesday, activist-investor Carl Icahn issued another open letter to shareholders of eBay (EBAY) following the company’s response to his original open letter here. We’ve reproduced the most recent letter below. Though the likelihood and/or timing of an eBay-PayPal split is highly uncertain at this juncture (his proposal), Icahn’s pressure on eBay’s board is bringing to light the significant underpricing of eBay on a sum-of-the-parts basis (as reflected in the 16-page report), in our view. From a shareholder standpoint, the latter may be equally as important as the former, as it will inevitably result in share-price appreciation. We continue to believe that eBay is worth $78 per share, and we expect the company’s shares to converge to those levels. Here … Read more

Carl Icahn’s Open Letter to eBay Shareholders Sends Stock Higher

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On Monday, eBay (EBAY) responded to Carl Icahn’s open letter to shareholders. We have provided Carl Icahn’s open letter to eBay shareholders and a link to eBay’s response below. We like the byproduct of Carl Icahn is pushing the company to separate its PayPal unit from its legacy auction website: it forces the market to value eBay on a sum-of-the-parts basis, the value of which we believe to be significantly higher than its current price. We continue to hold shares of eBay in the portfolio of the Best Ideas Newsletter. Shares of eBay are worth $78 each, offering investors material upside. Here is Carl Icahn’s proposal to eBay shareholders (source): —————————————————- Dear Fellow eBay Stockholders, We have recently accumulated a … Read more

Investors Will Continue to Be Rewarded in eBay; If Nothing Else, Icahn’s Entrance Will Drive an Upward Re-Valuation of the Equity

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Auctions and payments provider eBay (EBAY) has been a great success story for many Valuentum members, having registered a 70%+ gain since the company was added to the Best Ideas portfolio. We’ve often used eBay as an example of the Valuentum process in action (see here) and below: “(eBay) initially flashed a (Valuentum Buying Index) rating of 10 in late September 2011 (at $32 per share), and we added it to (the) Best Ideas portfolio. The VBI rating changed to a 6 in December 2011 and then back to a 10 in May 2012. Because the rating never breached a 1 or 2, we did not remove the position from our portfolio. In fact, we tactically added to it. eBay … Read more

Quiet Trading This Week

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If you haven’t yet read Part I of our Best Ideas piece, you can find it here. The holiday week was very quiet, as expected. However, a few news items did hit the wires that we’d like you to be aware of. First, we received word from ChannelAdvisor, a leading cloud-based e-commerce solutions provider, that same-store sales momentum across the e-commerce spectrum may have slowed in the third week of December. This runs counter to the strong data we’ve been receiving from the space through most of the holiday season. However, we believe the recent news release is something we’d categorize as “noise” (immaterial), especially given the significant date-shifting performed in the representation of the data. ChannelAdvisor had the following … Read more

Cyber Monday Online Sales Rocketed Higher; Mobile Growth Spectacular

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On Monday, Channel Advisor (ECOM), a leading provider of cloud-based e-commerce solutions, released its assessment of Cyber Monday: Amazon and eBay are trending over 30% compared to last year. Google Shopping continues its gains as well. Search and CSE slowed down through the day with Search currently trending ~6% and CSE 14%. Overall it looks like Cyber Monday is (still) on track to be up over 30% compared to last year from a SSS basis, which would make it a new record day for e-commerce! Today, the firm followed up with a few additional anecdotes and its thoughts about the Cyber Five, the five days from Thanksgiving to Cyber Monday: Amazon – Amazon is off to a strong holiday. The … Read more

Great Early Holiday Sales Read for Best Ideas Portfolio Holdings

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On Saturday, IBM Digital Analytics Benchmark, a source for real-time cloud-based online retail data and analysis, revealed strong online retail trends for this Thanksgiving and Black Friday: US Holiday shoppers once again shopped online early for the best deals with Thanksgiving Day online sales increasing by 19.7 percent over 2012. This momentum set the stage for a record Black Friday, with online sales growing 18.9 percent over the same period last year. The biggest surge came from mobile sales increasing to 25.8 percent of total online sales for Thanksgiving and 21.8 percent for Black Friday as consumers went from the dinner table to their tablets to lock in the best offers. In addition, IBM reported that New York City consumers … Read more

E-commerce Exposure Still Makes Sense

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The Census Bureau of the Department of Commerce reported Friday that it estimates US retail e-commerce sales for the third quarter, adjusted for seasonal variation, came in at 17.5% (+/- 5.8%) versus the same period a year ago. On an adjusted basis, US retail e-commerce sales, as a percent of total quarterly retail sales, have advanced to nearly 6%, up from just 2% at the beginning of 2004 (shown in image below). Both the rapid pace of US retail e-commerce sales expansion and the trend toward more transactions being completed online show no signs of slowing. Image Source: US Department of Commerce The positive data follows comScore’s (SCOR) report, released earlier this month, of a 13% increase in US desktop-based … Read more

Facebook: The New Internet?

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First of all, we’d like to thank you for your ongoing support and wonderful emails about the performance of the dynamic duo today: Google (GOOG) and Baidu (BIDU), two holdings in the portfolio of our Best Ideas Newsletter. We very much appreciate your kind words. Though we (and hopefully all of our members) have profited greatly from these two behemoths in the ‘Internet Content & Services Group,’ we could have done a better job alerting you to Facebook’s recent meteoric rise. Today, we’ve raised our fair value estimate of Facebook (FB) to $76 per share (the high end of the fair value range is now $93 per share) as a result of more optimistic assumptions related to the firm’s opportunity in mobile and … Read more

4 Quotes That Suggest This Economy May Not Be So Hot

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The stock market’s recent performance has been puzzling to say the least. Not only are valuations stretched, but it seems like with each passing trading session, the broader equity market manages to edge out new highs (regardless of underlying business fundamentals). Though we’re happy to see the market march ever higher, a number of firms on our radar have issued some cautionary comments that are worth noting. Over the intermediate- to- long-term, corporate fundamental outlooks will trump any near-term rise in sentiment caused by the re-scheduling of yet another debt ceiling debate (this one now scheduled for February 7). We’re paying close attention to corporate activity. IBM (IBM) “From a geographic perspective our challenge this quarter was in growth markets, … Read more