eBay Inc (NASDAQ:EBAY) stock's rating at Piper Jaffray was revised down to Underweight from Neutral in an updated research note sent out to clients and investors. Piper Jaffray analyst Gene Munster noted that increasing penetration in the electronic payment segment by Google Inc. (NASDAQ:GOOGL), Apple Inc. (NASDAQ:AAPL), Facebook Inc. (NASDAQ:FB), and Samsung Ltd (NASDAQ:SSNLF), will have significant negative implications on eBay.
Mr. Munster is concerned that these companies will take away a major chunk of PayPal’s market share in the next few years, and will hamper the online payment service's valuation that is set to be spun off from eBay by the latter half of this year. Back in September, eBay stock was downgraded to Neutral at Piper Jaffray in light of Apple Pay’s closing release that was being perceived as a “threat” to PayPal by analysts.
The sell-side firm was subsequently proven right as Apple Pay quickly became a massive hit among users following its debut in October 2014. The service allows users to make transactions through the iPhone 6. While it is currently only available in the US, the tech company has been making robust efforts to expand the service into other markets such as Europe.
Samsung is also making increasing efforts to develop its own contactless payment platform called "Samsung Wallet." The South Korean tech behemoth recently purchased startup "LoopPay" that specializes in the electronic wallet service. In addition to this, Facebook also unveiled its Messenger app service on Wednesday that allows users to exchange money.
Mr. Munster, in his thesis, mentioned Google potentially acquiring PayPal, post spinoff. The search-engine giant could perhaps use PayPal’s technological capabilities and brand affiliation to develop the Google Wallet service and the recently announced Android Pay platform. Google Wallet, which was launched five years ago, has only recently attracted user interest mainly due to the growing popularity of Apple Pay.
Google Wallet is a virtual card holder that enables users to make payments using mobiles. Android Pay, on the other hand, is a platform for app developers to create their own mobile payment apps.
Despite the downward revision on eBay stock's price target from $55 to $49, Mr. Munster commented that PayPal might improve its service in the face of competition after the spinoff, describing PayPal’s new CEO Dan Schulman as "impressive." eBay shares are down 1.24% as of 10:49 AM EDT.