EBAY is about to release earnings. Ponder the Bear Case Scenario.
EBAY is subject to technological attack. EBAY transacts in currency. Just like banks attract bank robbers; EBAY attracts hackers. Luckily for banks you can only rob one bank at a time. EBAY goes down all together. The system is too integrated and perhaps that’s the fundamental flaw that hackers exploit. Bottom line security costs a lot and drains the bottom line. But like a nation-state that cannot defend itself against bullies and dictators you have to be able to throw a punch when you need to.
EBAY over time competes against the rest of e-commerce. Many brands and retailers operate on-line to varying degrees of success. As soon as EBAY comes up with something cool it is usually easily copied.
EBAY is not strong in non-English speaking regions. Asia has some very strong e-commerce offerings which have strong local and cultural support.
So as a shopping center EBAY is big. But there are other shopping centers with attractive shops as well. EBAY will become an also ran very soon.
PayPal continues to be strong and EBAY will eventually become a systemically important financial institution. The narrative transition from e-commerce to financial services will be difficult for investors. Most people do not switch gear very well.
George Gutowski writes from a caveat emptor perspective.