EBay Analysis
Sector – Technology Industry – Internet Software and Services Recommendation – Sell shares

Analysts: Peter Eghoff Lucas Mabey

Price (4/17/2006): 52-week Range: P/E (ttm): Shares Outstanding: Market Capitalization: Diluted EPS (ttm): Institutional Ownership:

$38.03 $30.78 - $47.86 49 1.41 billion 53.5 billion $.78 62.4%

Table of Contents

Executive Summary ……………………………………………………………

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Company Overview…………………………………………………………….. 3 Recent News…………………………………………………………………….. Financial Analysis……………………………………………………………… 10 11

Valuation Model………………………………………………………………… 18 Technical Analysis……………………………………………………………… 29 Conclusion………………………………………………………………………. 33 Bibliography…………………………………………………………………….. 34

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As stated above eBay have witnessed strong growth in revenues. The cause of this growth is due to steady increases in • • • • • Number of registered users User activity Number of listings User gross merchandise volume, and PayPal transactions

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EBay’s Business Strategy When eBay’s entered the global business scene during the highly profiled dot com boom in the middle and late nineties, it was only one of many internet based companies seeking to profit from eCommerce trading. An overenthusiastic market led to many hundreds of thousands of online companies being created. That fact that eBay is, not only around to today, but also highly successful is very much due to their business btrategy. Before eBay grew successful there were no other customer-to-customer businesses online, as most others focused on business-to-customer. Whereas other eCommerce companies sought expansion to other product lines, eBay grew through emphasizing expansion within their current customers needs as well as internationally. Like the industry in general, eBay’s business model is highly dependent on technology and expansion into foreign markets. The major dissimilarities are found in eBay’s unique interactions between the firm, buyers and sellers. EBay provides the forum that facilitates customer interaction thereby creating the transactions that eBay profits from. The development of this forum has created value for the network members. Through this value, eBay has managed to broaden