Monday, February 23, 2009

eBays Falling Stock

Along with many other companies eBay's stock seems to be falling drastically. So what can this online auctioneer do to lower their risk?

I think the first thing they need to do is diversify, through more acquisitions. Currently online auctioneering of people's old "junk" is probably not very profitable since so many people are holding onto every last penny trying to prepare for the thunderstorm of rainy days that seems to be approaching. If no one is spending money it is tough to make any money. So the next question is what to diversify their company into... Unbeknownst to me I recently used both of eBays sister companies; Skype and Paypal. These two companies are a good start for eBay but I feel that they need more to offset the losses they are incurring from their past cash cow. According to an article by Michael Copeland a senior writer for Fortune Magazine, eBay is fairing much worst off then many of its competitors like Amazon (http://money.cnn.com/2009/02/20/technology/ebay_stock.fortune/index.htm).
Copeland also referred to getting away from eBays traditional business of acting as an auctioneer since that seem to bring in the lowest amount of revenue for the online trading business but I feel that would alienate to many of eBays faithful and loyal customers. In my opinion, eBays most profitable avenue may be to increase the functionality of their off shoot program paypal, by purchasing other companies that perform the same function as paypal and in doing so they could set the standard for online purchases.

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