By Carly Forster
Ebay Inc. (NASDAQ: EBAY) is a San Jose, California based American multinational Internet consumer-to-consumer corporation, comprising of more than 128 million active users around the globe. It is one of the world’s biggest online marketplaces, where almost anyone can buy and sell practically anything via any connected device. With more than 500 million items listed on its website, eBay connects a varied community of individual buyers and sellers, as well as many small businesses.
Investors and financial analysts alike have grown wary of Ebay’s payment system, PayPal, ever since Apple (NASDAQ: AAPL) revealed its own new payment system called Apple Pay, a near-field communication payment service (NFC), on September 9th. Following the reveal of Apple Pay, consumers and investors have been curious about whether PayPal will expand into digital payments in the physical retail arena within the next year. J.P. Morgan analyst Doug Anmuth said of the subject, “The user experience looks easier than PayPal’s existing physical POS [point-of-sale] offering but overall adoption will depend on merchant acceptance, the rollout of NFC and consumer willingness to share additional card information with Apple.” He continued, “We believe Apple Pay will not be the merchant of record, but with a better user experience than PayPal at POS.”
Shares of eBay opened at $51.15 on Wednesday, September 10th. The company has a 1-year high of $59.70 and a 1-year low of $48.06. The stock’s daily moving average is $51.05 and has a 50-day moving average of $53.81. The market cap for eBay is $63.43 billion and its P/E ratio is not applicable.
On September 10th, Piper Jaffray analyst Gene Munster downgraded his rating for Ebay from Overweight to Neutral and cut his price target from $63 to $55. He noted, “Over the next three to six months…Apple Pay has the potential to disrupt the competitive mobile payments market.” He continued, “We expect that investors will begin to question PayPal’s longer-term role in offline payments and may question the staying power of online payments.” Munster has an overall success rate of 74%, helping him earn a +29.3% average return on all stocks he has rated and the #1 spot out of 3293 analysts on TipRanks. Furthermore, Munster has rated Ebay 13 times, earning him an 82% success rate in recommending the stock and a +7.3% average return.
Similarly on September 9th, Topeka Capital analyst Victor Anthony reiterated a Hold rating for Ebay with a $54 price target. He reasoned, Apple Pay “has the potential to disrupt PayPal’s own ambitions at the POS, which today has had a difficult time gaining traction. We understand that eBay’s position is that Apple could expand the number of retailers with NFC and thus open up the opportunity for PayPal. While that could be true, we find it hard to see Apple users using PayPal over what could be Apple’s option. PayPal could off course partner with Apple.” Anthony has an overall success rate of 81%, attributing to his +23.7% average return on all stocks he has rated. Anthony also holds the #19 top spot out of 3293.
Both top ranked analysts have the same opinion on Apple Pay’s potential effect on Ebay’s PayPal payment service. Do you trust their recommendation?