E-Commerce service provider eBay Inc. 's ( EBAY ) shares rose 2.98% to settle at $52.75 following rumors that Google ( GOOGL ) might buy stake in the company. However, eBay soon stated that no such conversation had taken place with the technology giant, making the shares lose much of its Friday gains.
The news came on the heels of the announcement made by Apple ( AAPL ) about its new mobile payment service 'Apple Pay'. This announcement led to a drop in eBay's share price as many investors are considering Apple Pay to be a direct competitor to PayPal.
PayPal, acquired in 2002 for $1.5 billion, remains one of eBay's most lucrative divisions. Since its acquisition, PayPal has become the giant marketplace's growth engine and the primary reason behind investors holding eBay shares. Increased preference among customers for online shopping has led to a proportionate rise in, the use of this online payment service. Thus, PayPal accounts for a large percentage of eBay's total revenue.
Though the competition is intensifying in the mobile payment space, eBay is leaving no stone unturned to enhance its mobile payment business. The company recently announced that PayPal will start accepting Bitcoin payments in the coming months. This could be a big move by PayPal as Bitcoin enjoys wide acceptance and enormous popularity.
With more users resorting to PayPal for various transactions, growth prospects appears bright. As PayPal's Bitcoin payment system takes off, it is expected to give it a competitive advantage over other companies, like Square, that have established their presence in this space.
eBay has a market capitalization valued at $69.45 billion and generates annual revenue of about $17.05 billion. The company is expected to generate higher revenues backed by its solid business plan, going ahead.
Currently, eBay carries a Zacks Rank #3 (Hold). Another stock that has been performing well is Mercadolibre, Inc. ( MELI ), sporting a Zacks Rank #1 (Strong Buy).