I’m admittedly on a bit of an island when it comes to eBay (NASDAQ:EBAY). I think EBAY stock is attractive at these levels, but it’s starting to look like I’m the only one.

On this site, Luke Lango argued that the selloff of eBay was not surprising. Indeed, Lango presciently predicted that eBay’s rally would end back in March, at a time when I was still bullish on the name. Two weeks ago, Bret Kenwell pointed to an ugly chart. And several analysts lowered their price targets on EBAY after the company’s mixed second-quarter report.

But I’m standing firmly behind eBay stock, at least for now. I understand the concerns about the company’s growth outlook. Competition is increasing, as everyone from Amazon (NASDAQ:AMZN) to Facebook (NASDAQ:FB) to Etsy (NASDAQ:ETSY) to Wayfair (NYSE:W), not to mention traditional retailers and privately held startups, are moving onto eBay’s turf.

Still, EBAY stock is now priced for basically zero growth post-2019, and its business is generating a huge amount of free cash flow. That combination provides eBay with a plethora of options — and a path to at least recapture the 25% lost from the stock’s highs set early in 2018.

Growth Concerns

EBay’s earnings admittedly were rather weak, at least relative to expectations. But the company’s revenue growth of 9% hardly sounds terrible, and in fact it was less than 1 percentage point below Street expectations. But a weaker dollar contributed 3 percentage points of growth, and the company’s full-year guidance was disappointing.

It seems like the news was better on the earnings front. eBay’s earnings per share of 53 cents were 2 cents better than the consensus estimate, and its full-year guidance of $2.28-$2.32 similarly was ahead of the Street’s average estimate of $2.27. But the catch is that it seems likely that share buybacks drove much of the “beat.” eBay repurchased a whopping $1 billion of EBAY stock in Q2, reducing its share count by about 3%. Assuming analysts didn’t model that lower share count, EPS was pretty much in-line and possibly slightly behind expectations heading into the quarter.

So the bearish narrative here makes some sense, since eBay’s growth was a little lighter than expected. And the obvious worry is that’ the problem isn’t going to get better and may even get worse. eBay’s sellers can move to a plethora of other websites, including Amazon and Etsy. They can even launch their own stores through an offering like the Shopify (NYSE:SHOP) platform. eBay’s buyers similarly have a wealth of choices, with private companies like Letgo and Seatgeek (a rival to eBay’s StubHub) trying to take market share.

And I’m not sure the market knows what to do with a mature, low-growth online retailer. There simply aren’t that many examples of such companies in this industry, which has only been in existence for about 20 years. The reaction of many investors seems to be to sell and look for growth elsewhere.

EBAY Stock Is Priced for Zero Growth

But what’s attractive about EBAY at this point is that it really doesn’t need much in the way of growth to rise. The midpoint of guidance suggests a 14.6 price-earnings multiple. Free cash flow should track earnings rather closely, based on the company’s historical capital expenditure and depreciation levels.

Using an 8% discount rate, a basic discounted cash flow calculation suggests that the market is pricing in 1% annual growth. Something like 3% of annual growth for eight years and then zero growth forever should make EBAY stock worth$34+ now.

So while the market is concerned about slowing growth – and with some reason – it’s pricing EBAY stock as if the company’s growth will end soon. And that seems a bit too pessimistic. eBay is still benefiting from its decision to move away from PayPal Holdings’ (NASDAQ:PYPL) payment platform. eBay can also look to emulate Amazon and other retailers by increasing its ad revenue.

I’m simply skeptical about the notion of eBay’s growth falling to zero. In the meantime, eBay has a huge amount of free cash flow (over $2 billion this year) and many options. Furthermore, its balance sheet is clean, as eBay’s debt is actually less than the combined value of its cash and investments.

And it will get another $1.1 billion of cash from selling Flipkart to Walmart (NYSE:WMT). Moreover, eBay can aggressively buy back its stock, and it can easily start paying a dividend. Even if the dividend yield of eBay’s stock reaches 3%, its payout ratio would be below 50%. Alternatively, eBay could look to carry out M&A.

Again, the concerns surrounding EBAY stock have some validity. But valuation matters, too. At $46 and a 20 price-earnings multiple, decelerating growth is a huge risk for eBay. At 14 times earnings, the risk of decelerating growth is almost priced into the shares. If the company’s growth doesn’t decelerate, EBAY shares should rebound.

As of this writing, Vince Martin has no positions in any securities mentioned.