The Two Hares and the Turtle that Suvived the Internet Bust: Yahoo, E-Bay, and Amazon

(Illustration by David Simonds; The Economist)


Yahoo!'s descent, first gradual then sudden, during this decade marks a surprising reversal of the fates of the only three big internet firms to have survived since the web's earliest days. Back in 1994 Jerry Yang and David Filo, truant PhD students at Stanford, started to publish a list, eventually named Yahoo!, of links to cool destinations on the nascent web. Around the same time, Jeff Bezos was writing his business plan for a website, soon to be called Amazon, for selling books online. The following year, Pierre Omidyar, a French-born Iranian-American, put an auction site on the web that would become eBay.
--The Economist



I was quite bullish on Amazon in the post I wrote yesterday, and this article from The Economist provides a simple overview of how the turtle, Amazon, overtook the two hares, Yahoo and E-bay. Amazon looks wildly overvalued on earnings basis (trailing P/E around 70; forward P/E around 40) but I would take a look if its valuation declines (perhaps during a bear market?).

As for Yahoo, contrarians may find it attractive based on its stock price decline, but I am not sure what will be left once Carl Icahn ends up 'doing his thing' with Yahoo...

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