Long eBay ($EBAY) & Short Demand Media ($DMD)

By: ispeculatornew
Date posted: 08.05.2013 (3:00 am) | Write a Comment  (0 Comments)

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Last week was a good one and while I’m not closing any trades today, a couple of them currently stand over the +20% return (TRIP vs OPEN and PCLN vs AOL). I will let those stand a bit longer though so we’ll see how things go. In case you missed it, LinkedIn (LNKD) once again announced strong earnings last Thursday. I’m so annoyed. I keep waiting for Amazon (AMZN) and LinkedIn to show some weakness… looks like I’m missing the boat on both. Oh well.

Today I’m back with a new long & short trade with two fairly familiar names. Let’s start off by looking at the numbers:

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And the quarterly Y/y revenues growth:

EBAY Revenue Quarterly YoY Growth Chart

EBAY Revenue Quarterly YoY Growth data by YCharts

Long eBay (EBAY)

Ebay continues to dominate the payments scene with Paypal and I expect that to remain the case in the near future which will make it a good buy at these levels. I do expect the company to be able to display more growth in revenues and profits than other companies that rely heavily on advertising.

EBAY

Next earnings release: October 17 2013

Short Demand Media (DMD)

It has not been easy for Demand Media to do well as it fights to get traffic and advertisers with the Google (GOOG), Facebook (FB) and other giants. I’m a big believer in the fact that eBay can more easily justify its current valuation and has less downside risk than a company a like DMD.

DMD

Next earnings release: August 7th 2013

Disclaimer: No positions on EBAY or DMD

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