The Beanie Babies Auction Test
When trying to determine the fair value of a company's stock price, investors have calculated and compared earnings, sales, subscribers, cash flow, assets, etc. Now as eBay begins selling its stock to the public Thursday, comes the smallest, most cuddly valuation metric around: Beanie Babies.
In case you are allergic to kids, haven't eaten at McDonalds or attended a sporting event recently, Beanie Babies are those small stuffed animals that have taken the nation by storm in the last couple of years, and the toys-slash-collector items are all the rage on person-to-person online auction sites like eBay (EBAY).
To judge how popular a given auction site is, "Beanie Babies is the acid test," asserted Larry Schwartz, president and chief executive of Times Mirror's (TMC) Auction Universe, which creates and operates person-to-person auction sites for numerous local and national magazines and newspapers.If that's the case, then eBay is far and away the most popular person-to-person auction site on the Web. On Wednesday, the site had 34,761 Beanie Babies auctions listed. Compare that to Auction Universe, which had 3,454 listed auctions, or Yahoo's (YHOO) 2,503. Even the all-Beanie-all the time Beanie Nation auction site, operated by a company called VersiMedia, had only 3,653 of the little rascals for sale.
Ty Inc., the manufacturer of Beanie Babies, says on its Web site that it encourages all retailers to sell the toys for around $5. Once they hit the collectible market, however, Beanie Baby prices don't look so teeny. Schwartz said an Auction Universe user recently sold a set of 5 Babies for $27,000, and that many Babies go for $3,000 to $4,000 each.
Of course, those prices are way off from when Beanie Babies mania reached epic proportions earlier this year. Rebecca Phillips and Rebecca Estessoro, two Beanie Babies experts who publish a weekly price guide, contend at their Web site that the fall in prices is no more than a "healthy correction."
Extending the stock market analogy further, Becky and Becky, as they call themselves, write that prces should rebound thanks to some new initial public offerings - new Teenie Beanie Babies that were given away in a wildly successful McDonald's promotion as well as some new stuffed animals manufactured by Ty Inc. How appropriate, considering how eBay's IPO has fueled a rebound in Net stocks.
"IPOs are a sign of a healthy, growing economy and bring some exciting companies, and a new supply of stock, to the attention of investors to consider for purchase," the Beckys write.
Of course, if Beanie Babies falter, a much less cuddly figure could give them a run for their money. Trading cards featuring St. Louis Cardinals baseball slugger Mark McGwire are the latest hot item on the auction sites.
By typing in "McGwire" and using the search function, eBay seems to be well in the lead in this race as well, with 6,128 Big Mac trading auctions listed on Wednesday, compared to less than 350 for both Yahoo and Auction Universe.
Now, if only they came out with a Mark McGwire Beanie Baby.
Written By Darren Chervitz