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Taking Aim At PayPal

The market for mobile payment transactions is predicted to rise 44% this year to over $235 billion, which includes merchant purchases, money transfers and bill payments. PayPal, owned by eBay Inc. (EBAY), is the best known mobile online payment option. PayPal is extremely important to eBay, as it accounted for about 40% of eBay's 2012 revenue. PayPal hasn't had much competition but recently big names have been surfacing as potential competitors. How much would eBay's stock be affected if a big competitor stepped in?

Security is the biggest concern for consumers who want to use digital wallet providers, which might be why PayPal has been successful in fending off some smaller challengers up to this point. Only about 12% of consumers surveyed say they have used a digital wallet service other than PayPal. However, with the explosion of mobile merchant transactions, bigger players are starting to surface and eBay shareholders should take notice. Stock Traders Daily has EBAY neutral long-term, thus far the stock has held support through a tight trading range over the last six months.


PayPal might finally see some real competition in the mobile payment service business, as bigger names like Apple and Facebook move in. Any business lost from PayPal would certainly be bad for eBay's stock. Shares of eBay have been in a tight trading range over the last six months, so right now there is no immediate concern, but if support breaks all that would change. At Stock Traders Daily the discipline is to sell/short if support levels break or resistance levels are tested, but neither has happened yet, so according to our observations EBAY should be monitored for opportunity, defined catalysts exist, but no actionable triggers are occurring for longer term trades in EBAY quite yet. Patience!
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