The great thing about online portals is that once they establish dominance in their market space, they can have fantastic earnings, and can attract a premium price for their service. When business costs go up, they can pass them onto their customers, which they regularly, yet perhaps begrudgingly, pay because usually the portal is the only game in town.
Here are three online listings portals that you should keep track of. Good news can send these flying, but because of high market expectations, problems and bad press can cause a sell-off quickly.
Trade Me Group (ASX: TME), the New Zealand online classified advertising portal, has increased the cost of its property listings, and local real estate agencies are saying that they may have to pass some of the cost onto the vendors for listing.
The company wants agencies to pay $150 per listing rather than a fee per office. This may move more business to its competitor, realestate.co.nz, but if vendors are willing to absorb the extra cost to be on the popular website, then only time will tell if this premium payment will increase earnings or lower customers.
Recently, its share price has been trending down since May this year, and earnings per share in 2013 were flat compared to 2012's results.
Carsales.com (ASX: CRZ) achieved earnings per share growth of about 23% on the average over the past three years, and its PE ratio stands at 29. Last month, there was concern that used car volumes might drop in the near term, and the share price sold off by about 4% on the news, and hasn't recovered as of yet.
Online jobs classifieds portal Seek (ASX: SEK) has recently announced that it would be selling off its stake in Think, a tertiary education company, which will net it about $104 million. It was weighing down the company's performance, and was not performing as projected.
It had an excellent 39.8% rise in earnings after tax in 2013, and has just set an all-time share price high of around $13.00. Being the #1 site for job listings keeps business flowing in, and analyst forecasts are expecting a 22% annual earnings per share increase over the next two years.
