"Value-trap" eBay vs "priced to perfection" Amazon

By Alexandria Sage - Analysis

SAN FRANCISCO (Reuters) - Lack of confidence in eBay and sticker shock over Amazon's valuation has left investors struggling to decide whether it's time to jump in.

Once the e-commerce leader, eBay Inc (EBAY.O) is cheaply valued but not inspiring confidence on Wall Street with its confusing three-unit business model. And while Amazon.com (AMZN.O) is stealing the spotlight, the online retailer's lofty price yields little fruit in the short term.

Longer-term, analysts say Amazon, which has had spectacular success reversing Wall Street's pessimism about its prospects and is innovating in technology and processes, is the better bet versus a stop-and-go eBay that might be overestimating its own growth prospects.

Investors will get a fresher glimpse of both companies when they report first-quarter earnings next week.

"Amazon is great but the valuation just scares us," said Solaris Asset Management's Tim Ghriskey, who does not own shares in the company because of the high price.

"At this point, the Street basically calls eBay a value trap," he said. "'It's cheap, but it's cheap for a reason. Things aren't going to be better; they'll get worse.'"

EBay's sagging price-to-earnings ratio, and the expensive price tag on Amazon shares are clear barometers of investors' appetite for the two e-commerce giants inexorably linked in Wall Street's mind.

While shares of eBay have risen 7.5 percent since January, Amazon shares, on a steady upward climb since November, are up 55.5 percent.