Wild Idea of the Day: Ebay or ETrade should buy Nasdaq and/or the NYSE
(Disclaimer I probalby own all of the stocks mentione in this article as of this writing, either directly through stocks or indirectly through ETFs, mutual funds, or options, and I may sell them at any time or buy more, who knows, not even me!).
Ebay is, I believe, the largest online marketplace. Its market capitalization as of 3/23/2006 is $52.6 billion. As its growth begins to slow, it needs to look into new markets, or perhaps, old ones, like stock exchanges. One of the nice things about online marketplaces (exchanges) is that you have fixed costs, but, as you scale in volume, beyond a certain point, every dollar in revenue is pure profit. I think that there is no greater opportunity for consolidation than now for stock exchanges, which have gone public. Whether stock exchanges should be public for-profit entities is another debate, however, the reality is, the NYSE and NASDAQ are now public, for-profit institutions.
Surprisingly, these venerable U.S. stock exchanges, pillars of the U.S. economy, have a fairly small market values. The Nasdaq's market value is $3.4 billion (That's far less than what EBay paid for Skype!) and the NYSE's is about $12 billion. EBay could easily in one fell swoop swallow up both of them and instantly dominate the financial trading markets in the U.S. What an incredible, grand move that would be (though surely this would raise some regulatory eyebrows and scrutiny).
The other logical acquirer I could see would be a major brokerage or financial institution such as ETrade, whose market cap is $9.7 billion. This would be a nice fit in that it would produce synergies in saved trading costs, and complementary products, to create a financial conglomerate.
Well, I'm not running either of those companies, so these are just crazy ideas at this point.
Ebay is, I believe, the largest online marketplace. Its market capitalization as of 3/23/2006 is $52.6 billion. As its growth begins to slow, it needs to look into new markets, or perhaps, old ones, like stock exchanges. One of the nice things about online marketplaces (exchanges) is that you have fixed costs, but, as you scale in volume, beyond a certain point, every dollar in revenue is pure profit. I think that there is no greater opportunity for consolidation than now for stock exchanges, which have gone public. Whether stock exchanges should be public for-profit entities is another debate, however, the reality is, the NYSE and NASDAQ are now public, for-profit institutions.
Surprisingly, these venerable U.S. stock exchanges, pillars of the U.S. economy, have a fairly small market values. The Nasdaq's market value is $3.4 billion (That's far less than what EBay paid for Skype!) and the NYSE's is about $12 billion. EBay could easily in one fell swoop swallow up both of them and instantly dominate the financial trading markets in the U.S. What an incredible, grand move that would be (though surely this would raise some regulatory eyebrows and scrutiny).
The other logical acquirer I could see would be a major brokerage or financial institution such as ETrade, whose market cap is $9.7 billion. This would be a nice fit in that it would produce synergies in saved trading costs, and complementary products, to create a financial conglomerate.
Well, I'm not running either of those companies, so these are just crazy ideas at this point.
posted by jasonz at
2:02 AM
1 Comments:
I am sorta mixed about this idea. While I think it would be great to have a common electronic marketplace where you can buy and sell everything from stocks to teapots, I am worried that this may cause the ability for people to hide significant financial manipulations in all the trading traffic. The NYSE and NASDAQ are very closely monitored and regulated.
But if I were to be an eBay shareholoder I think it would be great!!!
By
Sailesh, at 11:54 AM
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