Stocks of Online Auction Manager eBay (EBAY) will bid on Friday to its lowest level since December 2016. San Jose,…
Stocks of Online Auction Manager eBay (EBAY) will bid on Friday to its lowest level since December 2016.
San Jose, California-based companies took a break after hours that have entered today’s trading after PayPal (PYPL ) CEO Dan Schulman outlined a study that indicates the damage that eBay’s decision to expel from its trusted payment partner will bring with traders.
eBay first reported its plan to cut ties with its long-term strategic partner PayPal in January 2018. Since that time, stocks have lost almost 25% of their value.
“The sellers like eBay and PayPal share require to have PayPal,” Schulman explained in a performance presentation on Thursday night. “Their sales really depend on it.”
He backed this by quoting a market research report ordered by PayPal, revealing that consumers are “54% more willing to buy when a merchant accepts PayPal”.
Add concern to eBay, the study found that 59% of PayPal users have abandoned a transaction on eBay simply because PayPal was not a checkout option.
“We have 254 million customers on our platform right now,” said Schulman. “Imagine if almost 60% of them would abandon a sale because PayPal Checkout was not available.”
Analysts have raised this concern and add market strike on eBay.
“We lower our rating on eBay shares to” Hold “from” Buy “based on PayPal’s release of profit disposals of weak eBay quarterly volumes volumes,” wrote Stifel analyst Scott Devitt Friday morning.
He warned that the transition to alternative payment platforms is likely to lead to a “long-term period of compressed valuation for eBay shares”.
To hear more from Devitt’s report and hear his recommendations about where to put your money in e-commerce, check out Real Money’s Stock of Day coverage.
(PayPal is in Jim Cramers Action Alerts PLUS Member Club. Want to be notified before Jim Cramer buys or sells PYPL? Read more now.)