Shares of eBay Inc. (NASDAQ:EBAY) were down 8.8% as of 11:15 a.m. EDT Friday after results from PayPal Holdings (NASDAQ:PYPL) revealed weakness in the online marketplace platform's latest quarterly sales.
More specifically, when PayPal released its own third-quarter 2018 results after the closing bell yesterday, it told investors that volume from eBay Marketplaces grew a modest 3% year over year at constant currencies. That meant eBay represented 11% of PayPal's total payment volume during the quarter, down from 13% in the same year-ago period.
That 3% figure would mark a notable deceleration from eBay Marketplaces' 7% constant-currency growth in gross merchandise volume (GMV) last quarter. But to be fair, investors should note PayPal -- which went public after spinning off from eBay in 2015 -- is only referring to eBay volume that went through the PayPal platform last quarter, not necessarily eBay's total Marketplaces volume.
Still, during the subsequent conference call, PayPal management elaborated that softness and slowing growth from its business with eBay marked a "continuation of a multiyear trend."
Sure enough, Stifel analyst Scott Devitt downgraded eBay to "hold" from "buy" this morning. He also lowered his per-share price target to $35 from $43, citing PayPal's disclosure of "weak eBay third quarter gross merchandise volume trends."
eBay is slated to release its own third-quarter results on Oct. 30 after the market closes, so we should receive more clarity on its Marketplaces GMV growth then. But given this brief early peek into its results via PayPal, it's hardly surprising to see the stock pulling back today.