Wilson-TPC Posted November 25, 2014 Share Posted November 25, 2014 Thanks for the reply hillfronter83. I think there are some problems with PayPal being inside of eBay. Since the form 10 isn't out yet, I'm not certain if PayPal charged the same fee when the same transaction goes through on eBay. I know for certain that for merchants online specifically uses PayPal as an intermediary, PayPal has much higher margins. It's also a very high incremental margin business. I think with time and scale, PayPal will eventually get to MA and V's margins. Link to comment Share on other sites More sharing options...
jawn619 Posted December 5, 2014 Share Posted December 5, 2014 On page F-20 of their annual report http://files.shareholder.com/downloads/ebay/3696543860x0xS1065088-14-10/1065088/filing.pdf They have under their segments corporate and other showing a loss 1.659B. Can someone explain to me what this is coming from? Is this just the expense from their corporate headquarters? Is this part of the waste and excess from management that Carl Icahn was talking about? Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 5, 2014 Share Posted December 5, 2014 Thanks for the reply hillfronter83. I think there are some problems with PayPal being inside of eBay. Since the form 10 isn't out yet, I'm not certain if PayPal charged the same fee when the same transaction goes through on eBay. I know for certain that for merchants online specifically uses PayPal as an intermediary, PayPal has much higher margins. It's also a very high incremental margin business. I think with time and scale, PayPal will eventually get to MA and V's margins. It might be more meaningful to think of Paypal as operating in different segments. If somebody funds a purchase with a credit card through Paypal, margins will be low. Paypal behaves like any other credit card processing company. If somebody funds a purchase with ACH from their bank account, margins are very high. For most purchases, the consumer has an option. Paypal spends a lot of effort into nudging its customers to pay with their bank account. There are different market segments. You have auction payments, which have their own quirks. There's a lot of fraud to deal with and the fraud takes many forms. You have merchants selling stuff online. Sometimes merchants will try to scam consumers+Paypal, sometimes consumers scam the merchants, etc. etc. If a merchant does something that ends up in controversy (e.g. not delivering on their product/service), then there might be a lot of chargebacks and chargeback fees for Paypal. So there are some areas that Paypal won't touch like Kickstarter. There's a continuum of risk that Paypal is exposed to. 2- If Paypal goes higher risk and accepts something like Kickstarter, then you might expect its margins to go down due to fraud, chargebacks, and providing customer service. Its margins are variable and might not necessarily tell you about how well the business is doing. Link to comment Share on other sites More sharing options...
jrunner Posted December 6, 2014 Share Posted December 6, 2014 What's risky about Kickstarter for the payment processor? A valid credit card must on file to begin with, and Amazon is taking a 5% cut. When I sell products through PayPal their cut is < 3%. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 6, 2014 Share Posted December 6, 2014 If somebody doesn't deliver on their Kickstarter, then a lot of consumers may be pissed off and do chargebacks. Remember that people put up money for a project of unknown quality and delivery date. That might or might not be why Paypal stopped allowing Kickstarter projects to be funded via Paypal. Actually I'm not sure what the real reasons are. see http://www.forbes.com/sites/erikkain/2013/09/10/paypal-freezes-crowdfunding-money-for-kickstarter-hit-dreamfall-chapters/ Link to comment Share on other sites More sharing options...
jrunner Posted December 6, 2014 Share Posted December 6, 2014 Ah, this sounds familiar. This is a type of scam protection that PayPal has in place. The system is suspicious of a rapid succession of payments, which is ineffective for a crowd-funding campaign. I'm not even sure how they were accepting PayPal payments, as the article stated, Kickstarter only accept payments through Amazon. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 6, 2014 Share Posted December 6, 2014 Some Kickstarters will accept payments outside of Kickstarter. The system is suspicious of a rapid succession of payments, which is ineffective for a crowd-funding campaign. Paypal's system seems to be: - Accept payments first - If it looks risky, freeze the money. Unfortunately, there are a lot of false positives. This creates a lot of PR and customer service issues for them as legitimate users constantly get ambushed by their anti-fraud algorithms. Link to comment Share on other sites More sharing options...
no_thanks Posted December 9, 2014 Share Posted December 9, 2014 "PayPal saw a 62 percent increase of global mobile payments through its site on the day after Thanksgiving compared to last year" Hmm, wonder why they had such a big increase? Link to comment Share on other sites More sharing options...
jawn619 Posted December 11, 2014 Share Posted December 11, 2014 http://www.wsj.com/articles/ebay-mulling-job-cuts-next-year-1418250740?mod=WSJ_hp_LEFTWhatsNewsCollection Ebay might cut 10% of workforce before paypal IPO. That'll get rid of some of the 400 million that they spend each quarter on "corporate" right now ebay is has corporate expenses of around 1.3B for the first 9months of 2014. That's about the operating income of their payments segment! Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted March 15, 2015 Share Posted March 15, 2015 Updated to [hopefully] working link https://www.paypal.com/us/webapps/mpp/paypal-credit Is PayPal trying to become AMEX like? Instead of focusing solely on merchants, they have collected an amazing collection of consumers (more expensive but higher longevity on average?). Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 15, 2015 Share Posted March 15, 2015 they need to collect an amazing web developer or two so that links don't go to blank pages. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted March 15, 2015 Share Posted March 15, 2015 they need to collect an amazing web developer or two so that links don't go to blank pages. Haha, I updated the link (https://www.paypal.com/us/webapps/mpp/paypal-credit). Hopefully this works. This isn't really a PP issue so much as a Schwab711's an idiot issue. I was sent a "special deal" email and chopped the URL to avoid sending the world my personal info :) PP seems like it's evolving into a lower risk model than the closed-loop issuer models (Amex/Discover/ect) Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 15, 2015 Share Posted March 15, 2015 hmm so now they are a finance company. not sure I like this. I liked that they were a payment processor. so I don't see why they would have a differentiated customer? because they are more tech savvy, younger, educated?? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted March 15, 2015 Share Posted March 15, 2015 hmm so now they are a finance company. not sure I like this. I liked that they were a payment processor. so I don't see why they would have a differentiated customer? because they are more tech savvy, younger, educated?? They have had BillMeLater for a while now which already made them a pretty big finance company. Looks like they see more value in the PayPal brand then BillMeLater. The real change seems like they want to push the PP name moving forward (just another abrupt, major change from eBay). It seems like they want PP to be GE Capital to strengthen their ACH processing business? I agree with you on being skeptical of the move.. Also, as a payment processor, I haven't seen anything regarding their relationship with eBay post-split. Will they still be the exclusive payment processor for eBay and what are the terms? That is an incredibly valuable and historically growing revenue stream with a ridiculous above-market rake (I'm remembering 5% - 6%!!). I can't believe I still don't own MA/V considering financial services is probably my wheel-house. I really want a payment processor and both Amex and eBay seem very reasonable. I love companies that benefit from transaction inflation (% cut from increasingly larger transactions). Same reason TDG is so wonderful. I hate the idea of passing on PayPal since I understand the business so well. What valuation have others come up with? Dumb question, when is the spin-off taking place? Link to comment Share on other sites More sharing options...
cogitator99 Posted July 9, 2015 Share Posted July 9, 2015 hmm so now they are a finance company. not sure I like this. I liked that they were a payment processor. so I don't see why they would have a differentiated customer? because they are more tech savvy, younger, educated?? They have had BillMeLater for a while now which already made them a pretty big finance company. Looks like they see more value in the PayPal brand then BillMeLater. The real change seems like they want to push the PP name moving forward (just another abrupt, major change from eBay). It seems like they want PP to be GE Capital to strengthen their ACH processing business? I agree with you on being skeptical of the move.. Also, as a payment processor, I haven't seen anything regarding their relationship with eBay post-split. Will they still be the exclusive payment processor for eBay and what are the terms? That is an incredibly valuable and historically growing revenue stream with a ridiculous above-market rake (I'm remembering 5% - 6%!!). I can't believe I still don't own MA/V considering financial services is probably my wheel-house. I really want a payment processor and both Amex and eBay seem very reasonable. I love companies that benefit from transaction inflation (% cut from increasingly larger transactions). Same reason TDG is so wonderful. I hate the idea of passing on PayPal since I understand the business so well. What valuation have others come up with? Dumb question, when is the spin-off taking place? The spin is due on July 20. PYPLV is already trading and gives you an idea of what value the market is giving it. Currently that's $42 bn. Link to comment Share on other sites More sharing options...
portfolio14 Posted July 25, 2015 Share Posted July 25, 2015 "Inverting": How do you kill ebay? How can you undo ebay's network effect? Is there something Google can do? What paradigm shift is needed to kill ebay? Can someone think of a compelling case? Link to comment Share on other sites More sharing options...
DTEJD1997 Posted July 25, 2015 Share Posted July 25, 2015 I can't see any way to "kill" Ebay at this point in time... Never say "never" though. Who would have ever thought that Windows would become almost irrelevant? I can see Ebay's business being damaged severely.... How? A). you could have other sites that have a narrower focus start to take off. One for consumer electronics, another for clothing, another for art, another for coins, one for vehicles, etc. B). You could have Amazon take the real "powersellers" away. This is already happening to a degree. C). The biggest threat is probably Ebay shooting itself in the foot with silly/poor policies and alienating sellers/buyers. Also, you don't have to have Ebay go out of business or enter bankruptcy to make it a poor investment. What happens if the economy slows/contracts, Ebay starts to face competition AND they implement further poor policies? Might they go from a growth company to a company in contraction? Could their earnings go to $1/share? What if investor sentiment turned negative? Put a 12 P/E on a $1 of earnings and you've got a stock price well less than 1/2 of what it is now. I don't think that is the most likely scenario, but it certainly could happen. Link to comment Share on other sites More sharing options...
rukawa Posted July 25, 2015 Share Posted July 25, 2015 How do you kill ebay? How can you undo ebay's network effect? Is there something Google can do? What paradigm shift is needed to kill ebay? http://www.seattletimes.com/business/ebay-merchants-switching-to-amazoncom/ Amazon kills Ebay - Amazon has a better user experience than Ebay - Amazon ships more reliably than Ebay - Amazon has less fraud than Ebay and has a better reputation - Knick-knacky one off items like screen protectors, hdmi cables, rechargeable batteries, replacement parts that only used to be available Ebay are now available off Amazon. - Huge network effects: Amazon has a much bigger user base than Ebay, more users attract more sellers and more sellers attract more users. So Ebay has stupid management from what I am reading. And in addition they are competing against Bezos. Amazon will crush them without trying. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 25, 2015 Share Posted July 25, 2015 In the used market, Ebay competes with craigslist and kijiji. There's also very minor competition from forums (people use online forums somewhat similar to this one to sell used stuff to one another). For new products, Ebay is good for obscure items. Ebay is seeing more competition from Amazon for obscure stuff. Also, setting up a small e-commerce site is getting easier and easier. There are a lot of fenced goods on Ebay. Changes in law could hurt Ebay. Fighting with Paypal could hurt Ebay, leading to more fraud or worse customer service. Because they are independent companies now, they want to dump costs onto each other which can lead to fighting. e.g. if somebody is defrauded on Ebay and payments were with Paypal, Ebay might refer that person to Paypal's customer service (or vice versa). Both parties improve their profits if they can get the other company to bear the burden of customer service costs (and for developing anti-fraud technology and techniques). Link to comment Share on other sites More sharing options...
Jurgis Posted July 25, 2015 Share Posted July 25, 2015 Who would have ever thought that Windows would become almost irrelevant? OT. LOL. :o Link to comment Share on other sites More sharing options...
rukawa Posted July 25, 2015 Share Posted July 25, 2015 In the used market, Ebay competes with craigslist and kijiji. I never use Ebay to buy used items because the shipping cost isn't justified by the value of what is being shipped. Kijiji is great. I think this company faces tremendous headwinds and the trick for value investors will be to wait the business shrinks to the point where only the portion of the business where they have real competitive advantages (collectables?, antiques?) remains. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted July 26, 2015 Share Posted July 26, 2015 How do you kill ebay? How can you undo ebay's network effect? Is there something Google can do? What paradigm shift is needed to kill ebay? http://www.seattletimes.com/business/ebay-merchants-switching-to-amazoncom/ Amazon kills Ebay - Amazon has a better user experience than Ebay - Amazon ships more reliably than Ebay - Amazon has less fraud than Ebay and has a better reputation - Knick-knacky one off items like screen protectors, hdmi cables, rechargeable batteries, replacement parts that only used to be available Ebay are now available off Amazon. - Huge network effects: Amazon has a much bigger user base than Ebay, more users attract more sellers and more sellers attract more users. So Ebay has stupid management from what I am reading. And in addition they are competing against Bezos. Amazon will crush them without trying. I really like eBay in theory, but they are definitely are losing their network because sellers are going to AMZN (which has it's own problem). I definitely agree that collectibles/antiques are really all that's left. People hate the auctions which is probably not a good sign if eBay wants to remain differentiated. Collectibles NEED liquidity to survive, so I assume eBay will have the niches you mention for quite some time. I really wanted to pick this up post-split, but this is really not as great of a business as I thought. Link to comment Share on other sites More sharing options...
portfolio14 Posted July 26, 2015 Share Posted July 26, 2015 Thanks guys, appreciate it. A lot of thoughtful insights. Link to comment Share on other sites More sharing options...
Broeb22 Posted October 7, 2015 Share Posted October 7, 2015 How much would eBay need to invest to change its growth trend from management's current projection of 0-3% annually to something that tracks closer to ecommerce channel growth? Link to comment Share on other sites More sharing options...
Investor20 Posted July 21, 2016 Share Posted July 21, 2016 EBay Posts Second Straight Quarter of Sales Gains http://www.wsj.com/articles/ebay-posts-second-straight-quarter-of-sales-gains-1469047120 Very nice discussion. I was looking into this stock and came across this discussion. To me Amazon doesn't seem to be a competitor for Ebay as their core businesses are different. Amazon sells its own products using mostly prime. Ebay business is third party online business along with bidding. Why would Amazon promote selling (after all the expenses they went through to build an efficient system) for third party online business at a price less than by Amazon. The third party online businesses are competitor to Amazon. If I am building online shop (I never sold online), it appears to me Ebay would be a better place as Ebay would have long term interest in making online business through Ebay to thrive. However, Amazon would have exactly the opposite interest, to kill their competitors. Also, for whatever reason, most of the third party purchases I made are through Ebay, while most stuff I brought on Amazon are Amazon's own. Any comments will be very much appreciated. Link to comment Share on other sites More sharing options...
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