EBay rallies as it drops PayPal

SEC FORM 4 - SEC.gov

Other analysts, however, said PayPal, which has been eBay's preferred provider for the past 15 years and will remain a payment page option on the platform for the foreseeable future, had the scale to ride out the blow.

PayPal Holdings, Inc. has its outstanding Shares of 1.19 Billion.

eBay's announcement provides some detail about how they expect their new partnership will provide better solutions and improved pricing options for its sellers.

EBay said it will start processing payments globally using Dutch payments company Adyen, allowing its users to remain on the eBay website when checking out.

Adyen has a wide geographic reach and works with over 150 currencies and 200 methods of payments.

Shares of PayPal sunk 7% Thursday after its former parent revealed it would no longer use the payments service as its primary processing partner.

Adyen is different to PayPal in that it offers back-end payment services.

PayPal Holdings, Inc. (PYPL) is estimating to achieve earnings per share (EPS) growth of 15.10% for this year while EPS growth expected to touch 20.78% for next year. During these years, eBay will make the transition to full payment intermediation. However in 2014, eBay announced that they would be spinning PayPal off into a separate publicly traded company. And buyers will have a wider choice of options on the new, more open eBay payments platform (bitcoin, anyone?).

The chief executive officer of PayPal, Dan Schulman, said on a call with analysts that the changing relationship with eBay was very "manageable" and that it was in line with PayPal's new strategy.

Several other institutional investors have also bought shares of the company.

Adyen, based in Amsterdam, processes payments for many big digital brands including Uber, Netflix and Easyjet. It also reported earnings of 59 cents per share. Sumitomo Life Insurance Co. purchased a new stake in shares of Paypal during the fourth quarter worth approximately $2,268,000. When eBay spun off PayPal in 2015 - something investors and analysts had urged it to do - the payments company's market value was close to $50 billion. Time will tell whether the move away from PayPal will be a benefit or nuisance.

eBay's move to intermediate payments gives the company more control over its marketplace and moves it in this regard to a similar level of control that Amazon has on its marketplace.

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