Shares of online auction leader eBay (EBAY) will be lowered to their lowest level since December 2016 on Friday.
The San Jose, California-based company has slapped one after the other (PYPL) CEO Dan Schulman outlined a study showing that eBay's decision to separate itself from its trusted payment partner will attract traders.
eBay first announced the removal of its strategic partner PayPal in January 2018. Since then stocks have lost almost 25% of their value.
"The sellers who share eBay and PayPal are demanding that they have PayPal," Schulman said Thursday's earnings briefing. "Your sales really depend on it."
He supported this with a market research report commissioned by PayPal, which found that consumers on average show "54% more willingness to buy when a merchant accepts PayPal."
Add to In the study, 59% of PayPal users post a transaction on eBay because PayPal was not a payment option.
"We now have 254 million customers on our platform," Schulman said. "Imagine, almost 60% of them would cancel a sale because PayPal Checkout was not available."
Analysts have picked up on this problem and increased concern on eBay.
"We lower our rating on eBay Holdings of" Buy "based on the announcement of eBay's earnings release in the third quarter of the third quarter, Stifel analyst Scott Devitt shows Friday morning.
He warned that the transition to alternative payment platforms is likely to lead to an "extended period of compressed valuation for eBay shares."
To hear more about Devitt's report and his recommendations on where else to put his money into e-commerce Watch Real Money's Stock of the Day Coverage.
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