Ebay shares fell on Monday after analyst downgraded the stock this morning to “sell” from “hold”, due to share loss and gross margin pressure in the current economic downturn.

Collins Stewart analyst Sandeep Aggarwal said, a recent 50 percent move in the company's stock price is excessive given that there have been “no signs of fundamental improvements.”

It expects revenue may fall to $7.865 billion from $8.067 billion in the current year and $8.537 billion from $8.713 billion for the next year, as it goes incrementally more negative, particularly in weakening trends in online marketing services in shopping.com and Pay pal.

But Goldman Sachs analyst James Mitchell cut his rating on the stock to buy from Neutral, as he set his price target on the stock to $30, from $38.

Adding that, eBay's business is too large and complex to rapidly reinvigorate, especially in a challenging macro climate, causing consumers to trade down.

Meanwhile, in a separate statement, eBay reported it has agreed to buy a 34.2 percent stake in South Korea-based Gmarket for $413 million or $24 a share, which would make eBay the largest shareholder in Gmarket. The company said the move will help the U.S. online auctioneer eBay emerge as a top player in South Korea's customer-to-customer online market by taking control of its key competitor, according to the reports.

Aggarwal expects $1.41 earnings per share from $1.54 in 2009 and $1.54 from $1.68 in 2010.

South Korea Ebay PayPal