This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Digital Skeptic: Celebrate eBay -- the Web Parade's Only Winning Float

NEW YORK ( TheStreet) -- In this week of Independence Day flag waving and parades, let's take a moment to gawk at what is probably the Web's only real prize-winning investment float: eBay (EBAY - Get Report).

"There is no denying the sheer power of the mom and pop trader let loose online," Alexander Zacke told me a month or so back. "On the day after 9/11, I remember the rest of the world froze, but eBay still turned over hundreds of millions."

Zacke has a fascinating investor perspective on making money selling stuff on the Web. He's now CEO of Auctionata, a Berlin online art auction house that last week set a Web sales record of $2.4 million for an Egon Schiele watercolor. But back in the day, Zacke cut his Web selling teeth by rising to become a so-called titanium powerSeller dealing art and antiques on eBay.

"I did $10 million a year starting in 2000 for seven years," he said. "What you learn is how much sheer cash is out there on this network."

Starting all the way back in 2008 down through fiscal 2012, both operating and net margins at eBay stayed locked in at around 25%. There is simply none of stench of out-of-control expenses that stink up the financials of Amazon (AMZN - Get Report), Google (GOOG), Facebook (FB), Netflix (NFLX) and all the rest of the pure-play Web.

In fact, eBay makes so much money so consistently that Uncle Sam waddles over for his cut. In fiscal 2012, for example, the taxman took a healthy 15% bite out of the $3.1 billion of before-tax income.

All these earnings makes eBay's balance sheet so stable that Father Luca Pacioli, the genius who invented the concept back in 1494, would be proud. Starting again in 2008 up through 2012, total current assets -- you know, cash, receivables and other stuff a business really needs to make money -- grew consistently by 150-some-odd-percent.

And from a cash flow perspective -- no lie -- Bernie Madoff couldn't cook up sexier figures. In 2008, eBay threw off $2.3 billion in cash from operations. By the end of last year, it tossed off $3.8 billion; that's more than 27% of revenue.

Go try to find a Web outfit healthy enough to make those kinds of margins, pay those kinds of taxes and stash that kind of cash.

And let me know how that works out for you.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AMZN $445.10 14.13%
EBAY $59.20 0.53%
AAPL $130.28 0.47%
FB $81.53 -1.07%
GOOG $565.06 3.30%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs