eBay a Haven in Hard Times

That news eased fears that its decade-old bread-and-butter business was being rendered obsolete by technological change, while vindicating management claims that fluctuations were instead driven by the mix of incentives offered to users -- and sparking a rally in eBay shares.

And far from a relic of bygone days, recent weeks have demonstrated that eBay is finding inventive new ways of tying up its deeply defensible auction business with some of the hottest new technologies on the Web. eBay is working on a deal with teen social-networking site Bebo that could bring it better exposure to a newer and younger demographic, The Wall Street Journal reported last week. Along with Bebo, eBay is also reportedly working with social networking sensations Facebook and Myspace.

Still, despite an attractive valuation, shares of eBay can't seem to hold onto gains. The stock trades at about 20 times forward earnings -- the lowest of any Internet giant -- and has a price-to-earnings-to-growth ratio of 1.2.

But despite gaining as much as 13% since announcing its fourth-quarter earnings in January, eBay is now up only 3% in 2007.

Much of that giveback, of course, is due to the same concerns over a slowdown that hit major indices over that period. But if fears actually do materialize, they may wind up helping eBay, as they did six years ago.