For eBay (NASDAQ:EBAY), the bear case all comes down to the numbers.

As the bull in this duel, I could warn you that P/E ratios won't tell you much. I could tell you that eBay is a premium brand that deserves a premium multiple. And I could tell you that eBay has always looked expensive by the numbers. In each case, I'd be right. Behold:


Average P/E











Source: Capital IQ, a division of Standard & Poor's. 

But the simple truth is that numbers and stocks go together like peas and carrots. The Captain and Tennille. Patrick and SpongeBob. Jon Stewart and Stephen Colbert.

Bad news, right? Hardly. Check out these numbers for eBay:

  • 221.6 million registered users in 2006, up from 135.5 million two years before.
  • 171.2 million Skype users in 2006, up from 74.7 million the year before.
  • 57.2% of eBay purchases were paid via PayPal, up from 52.7% the prior year.

In short: eBay is growing steadily, and finding more ways to profit from every dollar spent at its site.

Understocked and up a river
Then there's the competition, or lack thereof. Yes, I know there are roughly 170,000 "for sale" signs on Craigslist right now in Denver. Fine. Just remember that Craigslist really cut its teeth as a place for barter. It's like Freecycle on steroids.

Besides, eBay, which holds a 25% stake in Craigslist, is no less impressive. More than 647,000 items of women's clothing are on sale now. And 91,000 comic books. And 2,000 BMW autos, including a vintage 1981 6 series sedan. (Woo hoo!)

Where do Amazon (NASDAQ:AMZN) and Overstock (NASDAQ:OSTK) -- eBay's closest competitors in digital auctions -- rank? The "Big A" has 212 comic book listings in the Amazon Marketplace, while the "Big O" has just 21 listings in the same category.

Let's see: 21, 212, or more than 91,000. Where would you shop if you were a buyer?

eBay's overwhelming advantage
To be fair, Rick is right to point out that eBay's auction business isn't growing like it once was. And the threat from free online classifieds is real enough that eBay is launching its own Craigslist killer, called

But is that really a reason for panic? I can't see why. Remember, for all its years of torrid growth, eBay still claims just 221.6 million registered users worldwide. To put that in perspective, consider that almost 50% of eBay's marketplace revenue is derived from overseas auctions. Chances are that more than 6 billion people still haven't heard of, or used, eBay.

Those who have are loyal. More than 36% of eBay's audience is composed of "active users," and a subset of those have earned millions by building businesses on the site. So much, in fact, that they have a group: PeSA, the Professional eBay Sellers Alliance, which conducts more than $400 million in business annually on eBay. Some of these sellers are based as far away as Australia. You think they'll let the auction king fail?

Bears, you're on notice
Which, finally, brings us back to the numbers. Yes, eBay is potentially expensive at 39 times trailing earnings. But it was also expensive at 97 times earnings. Look what's happened since.

eBay is different now than it was then. It didn't have PeSA. It didn't have 221.6 million registered users. It didn't have Skype and its international audience. And it didn't have nearly as many broadband connections to infiltrate.

Nope, this isn't your burnout dot-bomb buddy's eBay. This is your eBay, and it's here to make you money. Say hello, Fool.

Wait! You're not done with this Duel. Go back and read the other arguments, then vote for a winner.

BMW, eBay, and Amazon are all Stock Advisor picks. Get a peek at all of the stocks that are helping David and Tom Gardner to beat the market by more than 39% as of this writing. All it takes is a 30-day free pass, and there's no obligation to subscribe.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Get the skinny on everything Tim is invested in by checking his Fool profile. The Motley Fool's disclosure policy isn't for sale.