EBAY INC. (A) Case Solution
QUESTION # 01
Relate the case study to the topics/theories we learnt in class (signaling, agency, market efficiency, corporate governance)
Ebay offered public equity to raise more capital in order to repay the debts & for investment in new businesses, Ebay had selected Goldman Sachs. Gary Bering found the momentum produced by IPO, but it taken concentration on the implications of these technique.
Enrich technology has raised $145 million and it was offering below then to its price.And 88% IPOs were trading on lower price. Gary Bering was worried regarding the offering price of the company and he thinks that it might becomes stronger in upcoming days, and the players were investing in more saved securities. So by considering the government policies or the regulations every step taken by players and they were also very worried by analyzing the market behavior of the stocks. Marketing Channel or advertising also played a vital role for the selling of shares and everyone had analyzed it. Efficient results also very helpful for analyzing the market behavior just like the results of past 15 or 20 years, these numbers were very helpful for the individuals who were going to invest in the stock market or wanted to start trading.
Ebay has increased its number of users from three lacsforty thousand to eight lac fifty thousand in the start of 1998.Ebay wanted to spread its services on international level by the use of worldwide technological system. And the internet services were used as a medium of communication between the members. International Data Corporation analyzed that the international users through internet would grow from 69 million to 130 million in just five years so this was also a sign of success for the business that was totally dependent on the amount of users. IDC also assumed that the internet commerce would grow from $32 billion to $130 billion in just two years.
Industry market multiples applied for setting up the price of IPOs, including the price of sale, price earnings or market to book ratios. This way felt difficult for the emerging markets. Beginner showed that he had techniques for collecting more data because if data was increased so then there would become more chances of the efficient results. He felt that the date has only a minimum time so due to this he had not taken any new step and he don’t want to enter in any new thing. There’s need to do plan on the spot of time. If EBAY accept the offer, then he must have to agree on the targeted value. In the IPO, the original certificate was sell on below then 9%. And the cost of current owner holdings was $16 that is $600.
QUESTION # 01
What are the benefits and drawbacks of going public for EBay? You will need to relate the points learnt in class to EBAY’s situation. Simply restating your lecture notes is not enough.
Benefits of EBAY
- The biggest benefit of Ebay was it had given a best solution to the people invest in stocks, which would have the chances of becoming profitable for them.
- And also the system was auto generated means that it had collected long years of data and then the charts and different graphs were also available.
- If someone wanted to invest so he could easily get an idea about the best stock where it would become very profitable for him to invest in.
Drawbacks of EBAY
- Ebay had taken step for the registration process with Securities and Exchange Commission (SEC) FOR its first sale. As because many other companies were also trying for the registration so due to this it taken a lot of time.
- Many investors that were very interested to invest in Ebay, by seeing the long duration of registration some investors had changes their mind and then divert towards other exchange companies.
- This is the weakest point in the history of Ebay that sometime Ebay’s team didn’t work efficiently due to this some customers mind had been changes. Or there’s need to make more marketing channels for this business so then the profitability would increase.......................
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