EBAY CEO Sells 50k Shares, Exercises Worthless Options in Front of Q2 Earnings

16 Jul

This post is little more than the musings of a past eBay Platinum Powerseller with some commentary about the state of the auction world.  It is just one opinion and I am certainly not certified to give any financial or stock advice, so take from it what you will.

Let’s Do Lunch

Anyone who knows me in person knows that I rarely talk about my business or what it is I do.  Being a “professional eBayer” is extremely interesting to people, mostly because everyone’s dream is to quit their job and make millions while working from home.  That fact is evident in those signs you see proclaiming you can “make 30k a week” if you simply call Juan at 1-800-rip-me-off.  People are always asking me the same questions: “How much do you make?”  “Where do you get the stuff you sell?”  “Can you help me do it?”  I used to enjoy talking about eBay back when I was selling Creative Muvo MP3 Players my freshman year in college.  My father’s favorite story about me is how I began on eBay – taking apart MP3 players, selling the Compact Flash card that was inside, inserting a smaller Compact Flash card into the MP3 players, reprogramming it, and reselling the MP3 player.  Back then, the Muvo cost $100, but it had a 4GB Compact Flash card inside of it that was worth about $200 and then the MP3 player could be reprogrammed with a smaller, cheaper card and resold for $50 or more.  I made about $20,000 profit in eight weeks – not a bad sum for an 18 year old attending college full time.  Schemes as simple and profitable as that are rare these days.  Lord knows eBay and PayPal would shut me down in an instant if I started moving that kind of product in such a short time today, with the dozen feedback and a new PayPal account like I had back then.

The eBay golden years, a time I fondly reminisce about now, were back in 2003 to 2005.  I don’t know much about stuffing money in the Caribbean, but I like to think that eBay back then was as easy and profitable as moving money interest free to the Caymans for characters like Tony Montana in Scarface.  Everyone’s story is different I’m sure, but those were my best years.  Sure, I’ve had plenty of success since then, but I doubt anything will ever be as fun as drinking beer, reprogramming MP3 players, and moving $1,000 a day from PayPal to my bank account.  Maybe I am just that nerdy, but it’s hard for me to envision a time in the future where things will be as care free as they were back then.

Getting Harder

You don’t have to be a rocket scientist to figure out things are more complicated in the auction world than they were six or seven years ago.  I keep up to date with just about everything that’s going on in the eBay world and even try my hand at writing tutorials and in-depth analysis from time and time, but even I have trouble figuring out seller releases and new eBay rules and regulations.  I’m tired of being treated like I’m stupid and tired of the eBay brass trying to trick me into thinking their new policies and stipulations will somehow benefit me.  I’m not a big complainer and if you’ve read this website over the last year or so, you would know that I’m actually one of the most pro-eBay “bloggers” on the internet, outside of any eBay owned blog of course.  There’s no doubt that eBay’s core business plan has moved away from people like you and me, in favor of conglomerates and businesses looking to unload stuff they would be embarrassed or unable to sell on their own websites.  As I personally move further and further away from eBay, I am not as concerned as I might be if I still relied on it for the majority of my revenue.  If things were still as easy as they used to be, I would probably have an even larger presence on eBay than I did in 2005, but that is not how things have come to pass.  I don’t have any ill will or the anger that many people seem to possess, perhaps because I feel like I’ve already made my money, but I do find solace in the fact that eBay is hurting even more than I ever will.

Not Just the Golden Age for Me

I spoke earlier about how the years 2003 through 2005 were my best years on eBay.  While I technically made more money in 2006 and 2007, it wasn’t as fun or as fulfilling as those first couple of years.  Not coincidentally, those same years were also eBay’s most successful.  On January 2, 2003, eBay stock was trading at a paltry $16.88.  Exactly two years later, the same share of eBay stock was worth $58.89, an increase of about 250%.  I can only imagine the happiness Meg Whitman must have felt that New Year’s, having built a company that at one time sold for $1 a share into a company with a market capitalization of more than 50 billion dollars.  It’s a truly amazing story of ingenuity, foresight, and a belief that anything and everything is possible.  Of course, eBay quickly fell on hard times.  Just one month after the stock was trading at an all-time high of nearly $60, the share price fell to under $40 just one month later on January 31, 2005 and was just a touch above $30 by the end of April 2005.  Fast forwarding a bit to 2009, I’m sure we’re all aware of eBay shares falling under $10 in March 2009.  They have since rebounded all the way back to as much as $28 in March of 2010, before falling back to under $20 just last week.

Tired of the Amazon/EBay Comparison

My biggest “pet peeve” about the eBay/Amazon/auction blogosphere is our obsession about comparing Amazon and eBay as if they are somehow in direct competition or even similar companies.  Amazon and eBay are so different that you might as well add British Petroleum or GlaxoSmithKline to the mix and compare Wall Street results of all four.  Ever bid on an auction at Amazon?  Ever seen an MP3 available for purchase from eBay’s Music Store?  Ever bought a product directly from eBay?  Ever used Amazon Payments on Dell, Newegg, or any other major internet retailer other than Amazon?  Ever purchased eBay’s e-reader device?  There is just no comparing the two because their business models are so different.  How much of Amazon’s revenue comes from third party sales?  We will probably never know.  I could go on and on about Amazon, but it will have to wait for a future post.

EBay is a Stronger Company than Amazon

At the beginning of this year, I wrote an article about the many ways in which eBay is a stronger company than Amazon.  Titled, “EBay is a Stronger Company Than Amazon and I Can Sort of Prove It,”  I went into detail about how eBay has always been a more profitable company than Amazon and probably always will be.  Amazon’s market cap might be roughly twice that of eBay, but it’s also trading at an astonishing 53 times earnings.  This is an absurd price to earnings ratio and part of the reason why Bank of America and Merrill Lynch cut Amazon’s rating from buy to hold just yesterday.   Amazon is going to be even more pressured in the coming months with significant competition from Sony, Barnes & Noble, and Apple in the e-reader business and Apple will continue to make more money in media sales than Amazon could ever hope to.  Not to mention the fact that e-readers will never catch on with university students because it’s impossible to take notes or highlight important passages with a Kindle device, not to mention attach sticky notes or quickly flip back and forth between pages.    Considering Amazon made such a big deal out of the “student version” of the Kindle, they must have thought it would be a viable tool and a significant market for the device.  Like Amazon Payments, it looks like the Kindle may turn out to be a bust for the company.  Of course, Amazon never admits to how many they have actually sold, so we may not know until they stop selling it.

John Donahoe Sells 50K Shares, Exercises Worthless Options in Front of Q2 Earnings Release

John Donahoe has been selling 16,667 shares of eBay stock on the last Wednesday of the month for each of the last three months, probably as part of his contract or an expiration date on the sales or something.  Over the last six months, eBay insiders have sold 811,161 shares and purchased just 5,400.   The eBay haters may find solace in the fact that John was forced to sell 24,000 shares of eBay stock on May 11th, 2010 with total proceeds equaling $0.  Nothing worse than worthless stock options, except for maybe the $0 paycheck many past eBay sellers are getting from the company these days.

Where Do We Go From Here?

This next week will be an interesting one.  EBay reports earnings on Wednesday July 21 and Amazon reports the following day.  Standard & Poor’s reiterated a “Strong Buy” and $32 price target for eBay on July 14, even after the 3.8 billion dollar patent infringement case came to light. Amazon is probably on the way down, but you never know what their report will look like after several key acquisitions over the last year, including Zappos and Woot.  I am not too worried, considering I own shares of neither stock.  But it has always intrigued me, so I will continue to watch.

Take care and good luck shill bidding, Josh

4 Responses to “EBAY CEO Sells 50k Shares, Exercises Worthless Options in Front of Q2 Earnings”

  1. Philip Cohen 19. Jul, 2010 at 3:10 pm #

    The many issues of eBay are hardly worth discussing any more. Clearly, the headless turkeys at eBay have taken over the farmyard and since the arrogant, incompetent, sociopath, John Donahoe, has been given access to the executive wash room, eBay is being flushed further and further down the toilet every quarter.

    Their new US data center has, since the April Fools Day IT Massacre, been effectively non functional, or if it is functioning as planned, it’s a very strange plan. The fact is the whale is high and dry on the beach, has died, and is now stinking.

    The evening of the 21st surely is going to be another most entertaining night for eBay watchers. We are all waiting to hear who Donahoe will blame this time for what, in reality, is eBay’s ongoing dismal performance compared to online commerce in general (Amazon in particular). I have my thermos of coffee and popcorn already prepared in anticipation of watching a very unprofessional presentation (including lots of chimp-like hand waving) of a whole load of deceptive spin.

    In the meantime, for anyone seriously interested in the utter incompetence and deviousness of eBay’s executive management generally, and in particular eBay’s deliberate and demonstrable criminal facilitation of the rampant shill bidding fraud being perpetrated on unsuspecting buyers, by a great many unscrupulous professional sellers, on nominal-start auctions, an introduction thereto (along with some Pay-Pal horror stories thrown in for good measure) can be found at
    http://www.auctionbytes.com/forum/phpBB/viewtopic.php?p=6502877

    eBay/Pay-Pal/Donahoe: all Dead Men Walking

  2. Henrietta 20. Jul, 2010 at 8:46 pm #

    Donahoe’s May 11th transaction with $0 value is almost certainly a gift, or possibly a charitable donation. It is not a matter of being ‘forced to sell’.

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  4. Larry 08. Oct, 2014 at 5:28 am #

    Bidding at penny auction are fun and joy after making profit. There are few online website which is purely based on honesty, fair in the dealings; and transparent enough. wizbidz.com penny auction website

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