New Trade: Long eBay ($EBAY) & Short IAC Interactive ($IACI)

By: ispeculatornew
Date posted: 08.13.2012 (5:00 am) | Write a Comment  (0 Comments)

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This continues to be a very up and down year for me with these tech long and short stock picks and while in general things are improving. I will be closing one trade this morning as the trade with a long position on Priceline ($PCLN) against XO Group ($XOXO) has reached its stop loss after Priceline came up with very disappointing guidance for the next quarter because of the weakness in the European economy. The trade stands at -22%!

This week, I’m ready to short a stock that I’ve been very surprised by so far this year (not as much as AOL though) and I simply don’t expect it to keep up. When I looked at a stock like Quinstreet (QNST) and read its most recent earnings call transcript, I had a strong feeling that much of the resistance that it is facing would also affect IAC Interactive.

Let’s get right to it and look at the numbers:

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Long eBay ($EBAY)

eBay continues to impress me with the growth they have been able to display. Its Paypal unit continues to dominate the web payments scene with no signs of slowing down while the eBay platform seems to be a winner so far in mobile. Why? Convenience. One login, one website makes it easy to shop for pretty much anything. In the mobile space, that is turning out to be a key factor (similar story for Amazon as you can imagine). For that reason, I do consider eBay to be priced attractively and I’m much more of a believer in eBay’s growth story than IAC’s so seeing them trading at what is basically an identical P/E ratio makes this one a fairly easy choice to make.

Short IAC Interactive ($IACI)

IAC has performed very well both on the markets and in its fundamentals and I do expect a slowdown here, especially compared with eBay which faces less competition and is in much slower growing  segments.  I have not traded IACI much lately but I think that its most recent surge makes it a great short opportunity.

Disclosure: No positions on eBay ($EBAY) or IAC Interactive ($IACI), this trade will be opened on Monday morning

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