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Shares of eBay's leading online auction (EBAY) were trimmed Friday to their lowest level since December 2016.
The San Jose, California-based company has been successful after normal working hours after PayPal's (PYPL) CEO, Dan Schulman, has submitted a study stating that eBay's decision to do so has been delayed. away from his faithful payment partner will result in merchants.
eBay announced for the first time its intention to sever ties with its long-standing strategic partner, PayPal, in January 2018. Since then, equities have lost nearly 25% of their value.
"EBay and PayPal sellers are demanding to have PayPal," Schulman explained in a presentation of his results Thursday night. "Their sales really depend on it."
He confirmed this idea by citing a market research report commissioned by PayPal that revealed that consumers are on average "54% more willing to buy when a merchant accepts PayPal".
The study adds that 59% of PayPal users have abandoned a transaction on eBay simply because PayPal was not a payment option.
"We currently have 254 million customers on our platform," Schulman said. "Imagine that nearly 60% of them give up a sale because PayPal Checkout was not available."
Analysts have become aware of this concern, adding to the anxiety of the market on eBay.
"We are downgrading our rating on eBay shares to" Retain "from" Buy "based on the release of PayPal's results regarding low trends in gross merchandise volume on eBay in the third quarter," wrote the analyst. Stifel, Scott Devitt, Friday morning.
He warned that the transition to alternative payment platforms would likely lead to a "prolonged period of compressed evaluation of eBay's actions".
To learn more about Devitt's report and his recommendations on where to put your money in e-commerce, check out the Real Money Day Stock.
(PayPal is a participation in Jim Cramer's Action Alerts PLUS member club.) Do you want to be alerted before Jim Cramer buys or sells PYPL? Learn more now.)
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