Yawn to eBay

"Yawn. Let's look at Google." That is what the market said to eBay this week.

35% revenue growth is pretty good by most standards but when your standards are as high as eBay's it is mundane.

So eBay's trailing PE is down to 45 - almost unimaginable in the heady days of late 2004 when the trailing PE was well above 100.

I feel like someone up there is trying to teach me something about diversifying my portfolio. First Vodafone plummeted after I averaged down on it and now eBay. Aaaagh. I need to learn lessons the hard way and the value of diversity is starting to sink in.

Anyway here is eBay's year on year revenue growth for the last 5 quarters:

36 40 37 42 35

So this quarter's growth rate is only just below 2005 Q1. And the share price is the same. And the revenue is 35% higher. At some point eBay is going to become a real bargain. I think it is now but I said that at $44.

I am not alone. When eBay was at $46 a few months ago I remember Jim Cramer saying "buy eBay below $45." He is mute about it now!

I recently commented that I would be willing to bet a lot of money that eBay would trade outside the $35 to 45 range before the end of the summer.

Well it has - just not at the end I was expecting. During normal hours yesterday the price ticked below $35. Not a good day.

The market will do what it wants to eBay. At some point the share price will start keeping pace with the earnings growth and then I will be smiling.

:-)