Ebay posts loss for holiday quarter on US$3.1B tax charge

Josep Lago  AFP  Getty Images

Josep Lago AFP Getty Images

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.

Understandably, eBay's announcement negatively affected PayPal shares with its price plummeting by as much as 10 percent on Wednesday's trading.

Little-known Dutch firm Adyen will become eBay's primary payments processor under the scheme, which seeks to see more transactions conducted directly on eBay's sites.

The news came as PayPay disclosed better than expected quarterly earnings, however, its first-quarter outlook was largely disappointing. At the time, the two services seemed to be well-paired with eBay controlling the lion share of the online auction market while PayPal was the top player in online payment processing.

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. PayPal, a long-time eBay partner, will be a payments option at checkout for eBay buyers.

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By using Ayden, global customers are able to remain on eBay's website when checking out.

For the quarter ending March, eBay forecast revenue between US$2.57 billion and US$2.61 billion and adjusted earnings of 52 cents to 54 cents per share. In comparison, rival PayPal posted nearly $11 billion in revenue for the same period.

PayPal's focus on partnerships and acquisitions have been paying off with growth in payment volumes and users. In addition, PayPal seems to be doing fine and has recently reported a 59 percent rise in profit for the fourth quarter of 2017.

EBay said its gross merchandise volume - the value of all goods sold on its websites - climbed 9.7 percent to US$24.43 billion in the fourth quarter ended December 31.

Excluding one-time items, the company earned 55 cents per share, beating the average analyst estimate of 52 cents, according to Thomson Reuters I/B/E/S. Adyen posted a net revenue of $178 million in 2016. Sales and marketing expenses rose 13.3 percent to US$689 million.

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