EBay Stock Tumbles 8.9% to Hit Lowest Level in Nearly 2 Years

Shares of online auction leader eBay (EBAY)   tumbled 8.9% Friday to close at $28.75, their lowest level since December 2016.

The San Jose, Calif.-based company took a hit after PayPal (PYPL) CEO Dan Schulman outlined a study indicating the harm that eBay's decision to drift away from its trusty payment partner will bring. EBay first reported its plan to cut ties with its long-time strategic partner PayPal in January. Since then, shares have lost nearly 25% of their value.

"The sellers that eBay and PayPal share demand to have PayPal," Schulman explained in an earnings presentation Thursday night. "Their sales actually depend on it."

He backed his claim up by citing a market-research report commissioned by PayPal that revealed consumers on average are "54% more willing to buy when a merchant accepts PayPal."

Adding to the concern for eBay, the study states that 59% of PayPal users have abandoned a transaction on eBay simply because PayPal wasn't a checkout option.

"We've got 254 million customers on our platform right now," Schulman said. "Imagine if almost 60% of them would abandon a sale because PayPal Checkout wasn't available."

Analysts have picked up on this concern, adding to market anxiety about eBay.

"We are lowering our rating on eBay shares to 'Hold' from 'Buy' based on PayPal's earnings-release disclosure of weak eBay third-quarter gross-merchandise volume trends," Stifel analyst Scott Devitt wrote Friday morning. He warned that the transition to alternative payment platforms is likely to lead to a "prolonged period of compressed valuation for eBay shares."

To read more from Devitt's report and hear his recommendations on where else to put your money in e-commerce, check out our Stock of the Day coverage on Real Money, our premium site for active investors.

(This article has been updated with closing stock prices.)

(PayPal is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells PYPL? Learn more now.)

Employees of TheStreet are restricted from trading individual securities.

More from Investing

Amgen Is Showing Independent Strength in a Bullish Sign for the Future

Amgen Is Showing Independent Strength in a Bullish Sign for the Future

American International Group Is Looking Vulnerable to Further Weakness

American International Group Is Looking Vulnerable to Further Weakness

Must-Know Levels in Nvidia Stock Ahead of Earnings

Must-Know Levels in Nvidia Stock Ahead of Earnings

Chart of the Day: Home Depot and Lowe's Go Head to Head in Home Improvement

Chart of the Day: Home Depot and Lowe's Go Head to Head in Home Improvement

R.R. Donnelley Stock Is Ready to Change Direction

R.R. Donnelley Stock Is Ready to Change Direction