eBay's ( EBAY) honeymoon with investors was short-lived.

Shares of the largest Internet auction site fell 2.5% Thursday, erasing Wednesday's buyback-fueled after-hours gain. Even positive comments from bulls like Goldman Sachs analyst Anthony Noto, who reiterated his buy rating on the stock, couldn't stop the selloff.

At first, the market seemed to be impressed that the news from eBay wasn't worse, given the spate of negative publicity surrounding the company. Shares rose 6% late Wednesday in spite of soft third-quarter guidance.

But Thursday saw eBay shares hit another 52-week low. They last traded at $25.28, down 65 cents.

"It is getting to be a pretty interesting valuation because it's come down so much, but we typically don't own Internet stocks because of valuation level," says Chuck Jones, who follows the Internet sector for Atlantic Trust Stein Roe, which has $8 billion in assets under management. "With its growth rate slowing especially in core U.S. business, I think there are other Internet stocks that we could be owning." His firm holds a small position in eBay on behalf of clients.

Other skeptics, including Deutsche Bank's Jeetil Patel, are cautioning investors to stay on the sidelines for now. He lowered his 2006 earnings per share estimate to 97 cents from 98 cents and his 2007 EPS projection to $1.15 from $1.18. Patel also trimmed his price target to $26 from $30. His firm makes a market in eBay shares and has provided non-investment banking services to the company in the past 12 months.

"We feel that higher ad spending is clearly necessary for eBay to boost demand and to grow its top and bottom line," says Patel, who rates the shares as a hold, in a note to clients today.

eBay's decision to boost fees for its store listings may rile up its seller base, who are already fuming over its decision to ban the use of Google ( GOOG) Checkout, the search-engine giant's online payment system that analysts say poses a competitive threat to PayPal.

The increase is needed because sellers were clogging up eBay stores with merchandise that should have been sold through the regular channels on the eBay marketplace, the company says. Store listings account for about 83% of active eBay listings, which is more than the company wants. Goods sold through eBay stores take 14 times longer to sell than items sold through its other channels, the company says.

Wall Street has long fretted over the growth prospects for the San Jose, Calif.-based company, whose shares have tumbled 40% this year.

"We believe that this is the right strategy but we are concerned that this may further upset sellers and decrease listings without a notable increase in conversions," writes Piper Jaffray analyst Safa Rashtchy, who maintained his market-perform rating, in a note to clients. He cut his EPS estimates for 2006 and 2007 and lowered his price target to $30 from $31.

For bulls, this is the right time to buy the shares of eBay. They argue that concern about the potential impact of Google Checkout on PayPal has been overblown and that while eBay's growth is slowing, it remains strong.

"Competitively, the situation does not appear to be quite as dire as the prevailing sentiment and we continue to believe eBay's marketplace and payment system are well-positioned within their respective segments," writes Scott Devitt, an analyst with Stifel Nicolaus, in a note.

In his note, Goldman's Noto argues that many of the initiatives that eBay has recently undertaken -- including the new fixed-price goods site eBay Express and its partnership with Yahoo! ( YHOO) -- show that the company is moving in the right direction. Noto, whose firm has received investment banking frees from eBay in the past 12 months, left his earnings estimates and $54 price target unchanged.