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Investors Just Don't Get eBay

Rick Aristotle Munarriz
April 22, 2010

Shares of eBay (Nasdaq: EBAY  ) dipped last night, even though the company's quarterly report wasn't necessarily a stinker.

Sure, it's disappointing to see the online marketplace giant deliver guidance for the current quarter below Wall Street's consensus. It may appear to be a letdown to see revenue not keep pace with transactional volume. Net margins also could have done a better job.

However, put it all together, and it's great to see eBay growing again.

Let's dive into the numbers. Revenue grew by 18% to nearly $2.2 billion if we exclude Skype. Non-GAAP earnings of $0.42 a share are just 8% higher than the $0.39 a share posted a year ago, but analysts were settling for an adjusted profit of $0.41 a share.

PayPal was a stallion, again. Revenue rose by 26%, fueled by a 35% spike in total payment volume to $21.3 billion. This is a niche that eBay owns practically uncontested. Visa (NYSE: V  ) announced a $2 billion deal for CyberSource (Nasdaq: CYBS  ) yesterday to gain a bigger foothold in online transactions, but that isn't going to get in the way of PayPal's consumer and merchant dominance.

Besides, we're not seeing PayPal slow down since