Investment Growth? You Can Find It On eBay

The early days of online auction site eBay (NASDAQ: EBAY ) were like the town
of Deadwood during the Gold Rush. You could sell your junky old stereo and get
70% of its retail price, even if it was years old. Because markets were just
being established, prices had not settled, so you could fetch a lot more for
that headless Don Quixote statue on your desk than you would today. It also was
proof that eBays business model would work and generate a lot of profit for the
company. Indeed, like most other tech stocks of the late 90s, eBays stock was a
15-bagger at one point. Unlike most other tech stocks, however, it actually had
a business model, so its price did not collapse as viciously as others and even
went on to spectacular highs ($58) in 2005. The stock, however, never reached
those same heights again. In fact, eBay is 50% off those highs to this day,
though off its financial crisis low of $10. The question is whether eBay is
still a viable business and whether the stock is worth a look. For those living
under a rock, eBay is an online marketplace where people can offer items for
sale across the globe. It also owns PayPal, the online payment processor. At
first, there was nothing else like eBay. Now, however, competition exists in the
form of Craigslist and other sites. But another big issue took over that,
frankly, I didnt expect to happen. It appears eBay is economically sensitive.
You might think that when times are bad, people might flock to eBay to find used
items, gray-market items and heavily discounted new items. Thats true to some
extent, but that doesn't mean buyers were willing to pay what sellers were
asking.