eBay replaces PayPal with a much smaller payment startup

PayPal’s shares down 12%


PayPal Holding Inc’s shares fell by 12 percent on Wednesday after eBay replaced it with Adyen as its new primary payment processor.

PayPal’s former parent company eBay stated that it will soon be using the Dutch payment startup Adyen for global payments. However, eBay users will still have it as an option for checking out till 2023.

The news sent PayPal’s shares down to as much as 12 percent while shares of eBay rose near record heights.

The e-commerce giant accounts for about 13 percent of total payments processed by PayPal.

PayPal recently announced better than expected quarterly earnings but gave a quite disappointing outlook for the first quarter. After the release of the result, PayPal’s share fell by 2 percent, but the fall was enshrouded by the news of eBay planning to replace it.

Dan Schulman, CEO PayPal, told analysts that eBay’s new move was “manageable” and in line with the payment.

Since PayPal spun off from eBay in 2015, the payment company has been striving hard to transform itself from a company that processed payments only for its parent company to a company that processes payments for larger companies and for individuals as well.

PayPal has partnered with some high profile financial institutes and technology companies like Apple, Google, Visa, Mastercard, JP Morgan Chase & Co. These partnerships resulted in increased payment volumes and a broadened customer base for PayPal.

The California-based payment platform added 8.7 million active users on its platform since last year and processed $131 billion in payments in its fourth quarter, up 32% from last year.

PP forecasted first quarter adjusted earning of 52 to 54 cents a share while analysts expected 54 cents average.

Analysts predicted PayPal’s full year revenue of $15.16 billion while, PayPal expects of $15 billion to $15.25 billion.

Venmo, the mobile payment service owned by PayPal processed $35 billion in transactions in 2017, up 97%.

PayPal’s net income soared from $390 million, 32 cents a share, a year earlier to $620 million, 50 cents a share, in the quarter that ended on 31st December. While net revenue rose from $2.98 billion to $3.75 billion.

PP said that these results also included a total tax expense of $180 million according to the recent U.S tax reform.

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