EBay (EBAY) reported a quarter that beat the street view.  But that wasn't enough for after hours traders, who were focused on their light forcast of .32-.34 non-GAAP earnings, which would be over 20 percent below last year's first quarter.

Ebay's stock has been a major victim of the economic turmoil.  Even if eBay were to report earnings this year that are 20% below the previous year, that would translate into a P/E ratio of about 9.25 given the current $12.50 price in the after market.  That would not even factor in the over $3.00 in cash that eBay has held onto.

But today's market has proven to be unforgiving, even to a business with no significant direct competition.  Yahoo (YHOO)'s auction business failed while Overstock (OSTK)'s auction business is still very young.  eBay's model has proven to have a high barrier of entry due to eBay's tremendous scale.  However, investors are wondering why Amazon is doing so well while eBay struggles to grow with the current economic environment.

One reason may be that eBay is a trading site that is more dependent on merchants than Amazon, for example, and many merchants are simply going out of business.  But some are likely worried that there is an even greater existential risk for online auctions as a whole, since it is still a relatively young phenomenon.  One thing is certain.  If eBay's struggles are temporary, it will prove to be a major buying opportunity for a stock that not too long ago was trading at multiples more than three times the current enterprise value.  Despite its troubles, eBay still looks like an undisputed market leader.