With the market near all-time highs, it can be tough for contrarian investors to find decent stocks that have fallen to multi-year lows. But as I perused that list of hated stocks, one Chinese stock, 58.com (NYSE:WUBA), stood out.

58.com posted double- or triple-digit sales growth ever since its IPO in 2013, and its losses have considerably narrowed over the past year. Yet its stock has crashed over 50% this year and currently hovers near a three-year low. Is 58.com a good contrarian play, or is there a good reason to avoid it?

58.com's Android app. Image source: Google Play.

How does 58.com make money?

58.com is the largest online classifieds platform in China, and has a presence in nearly 500 cities. Its ecosystem includes listing platforms 58, Ganji, and Anjuke. 58 and Ganji are multi-category classified ad platforms, and Anjuke is a real estate listing platform. Its subsidiary 58 Daojia operates a mobile platform for at-home services like cleaning, moving, and manicures.

The real estate business accounts for about half of 58.com's revenues, while the remainder comes from job and automotive listings. 58.com mainly generates revenue from membership fees and online marketing activities. Its paid membership packages offer users online storefronts, preferential listings, customer service, and other perks. Its online marketing business offers real-time bidding, priority listing, display ads, and other marketing services to users in collaboration with other internet companies.

How fast is 58.com growing?

58.com's membership revenues rose 32.7% annually to $117.7 million last quarter and accounted for 38% of its top line. That growth was fueled by a 37.5% increase in paid membership accounts, which hit a "record high" of 1.23 million during the quarter.

Online marketing revenues rose 55.5% to $180.5 million and accounted for 59% of its sales. That growth was mainly driven by rising revenues at Ganji and Anjuke, organic growth at 58.com, higher overall traffic, and the effectiveness of real-time bidding services.

58.com's total revenue rose 43.9% to $306.5 million, but that missed estimates by $1.8 million. It also represented its slowest year-over-year growth rate since its IPO. CEO Michael Yao attributed that slowdown to softness in the Chinese economy and a tougher real estate market.

Anjuke's Android app. Image source: Google Play.

Being exposed to the right markets

58.com isn't the only Chinese company struggling with those headwinds. Its smaller real estate listing rival Fang Holdings (NYSE:SFUN) posted less than 1% annual sales growth last quarter, compared to 34% sales growth in the previous quarter.

However, listing portals focused on other markets have fared better. Chinese automotive listing site Autohome (NYSE:ATHM) posted 64% annual sales growth last quarter, compared to 60% growth in the previous quarter. The diversified portal SINA (NASDAQ:SINA) posted 22% sales growth last quarter -- its strongest year-over-year growth in eight quarters.

58.com doesn't compare favorably to these high-growth plays, so it's been widely ignored by investors. However, analysts still expect 58.com to grow its sales by 59% this year and 29% next year, so it's hardly down for the count.

Profitability and valuations

58.com has also done a good job keeping its costs under control. It posted a non-GAAP net loss of just $0.6 million last quarter, compared to a loss of $64.8 million in the prior year quarter. Its GAAP net loss also narrowed from $206 million to $29.9 million.

The company believes that the full integration of Ganji, which it merged with last year, will give it better control over expenses in the future. Analysts believe that 58.com could post a full-year non-GAAP profit next year.

Unfortunately, 58.com doesn't look cheap compared to its rivals in the Chinese listing and portal space. It trades at 4.3 times sales, which is the same as Autohome's P/S ratio and just slightly lower than SINA's P/S ratio of 5.2. Therefore, growth-oriented investors probably don't see the point of buying a decelerating growth play like 58.com when companies with accelerating growth have comparable valuations.

The verdict: Avoid 58.com for now

58.com's listing and home services businesses remain vulnerable to competition in each niche category, as well as the expanding O2O (online-to-offline) ecosystems of tech giants like Tencent and Baidu.

While members are still signing up, that growth is decelerating and could peak before it scales up to challenge those bigger players. Therefore, I believe that investors should avoid 58.com for now, at least until it presents a meaningful roadmap for its long-term ecosystem growth.