EBay shares head for record high on results, PayPal split
- Author: Wendy Palmer Feb 02, 2018,
Feb 02, 2018, 11:41
Shares of the San Jose, California-based e-commerce company climbed almost 9 percent to a record high in after-hours trading on Wednesday.
Dutch fintech company Adyen will become eBay's primary payments processor under the plan, which seeks to have more transactions conducted directly on eBay's sites.
While Adyen will eventually be easing out PayPal from its current role, eBay assures that PayPal will remain one of the payment options that buyers can choose upon checkout. eBay further revealed it has an "Operating Agreement with PayPal, which remains in place through mid-2020". With payment intermediation, shoppers will be able to complete their purchases within eBay.
EBay said the shift will result in lower payment processing costs for merchants selling on the platform and greater options for buyers.
EBay and PayPal have agreed on terms to offer PayPal as a way to pay at checkout on the eBay intermediated model until July 2023. It hopes to have transitioned most of its Marketplace customers to its new payments system in 2021. (EBAY ) will shift its payments business from long-time partner PayPal Holdings Inc.
Adyen has a wide geographic reach and works with over 150 currencies and 200 methods of payments.
"EBay's decision to reduce PayPal's prominence represents a major setback for PayPal", said Gil Luria, an analyst at D.A. Davidson & Co.
EBay expects full-year earnings in the range of $2.25 to $2.30 per share, with revenue ranging from $10.9 billion to $11.1 billion.
PayPal said total payment volume rose in the fourth quarter as active customer accounts hit 227 million.
EBay Inc (EBAY.O) posted higher revenue for the key holiday quarter on Wednesday as changes to its websites and a focus on marketing drew more shoppers to its marketplaces. But that's slower growth than other parts of PayPal's operations, which means that eBay makes up a decreasing portion of the tens of billions of dollars of payments the company processes.
The company said it expects revenue in the range of $2.57 billion to $2.61 billion for the fiscal first quarter. Earnings excluding some costs were 55 cents a share, compared with the average forecast for 52 cents. Double-digit growth was a big milestone for CEO Devin Wenig, who has been working on a turnaround.