PayPal Holdings Inc. fell Thursday on concern the potential expansion of Apple Pay to mobile browsers threatens a portion of the company’s payments volume.
PayPal shares lost 4.7 per cent, the most since February, at 11:19 am in New York, after slumping as much as 8.7 per cent earlier in the day. Re/code reported Wednesday that Apple Inc.’s digital payments service will expand to websites later this year and will be available to shoppers using Apple’s Safari browser on iPhone and iPad models that feature Apple’s Touch ID fingerprint technology.
The move positions Apple as a more-direct competitor to PayPal, which offers a popular payment method on websites. Apple Pay has been around since 2014, but this new expansion will be the first overlap between Apple Pay and PayPal, Piper Jaffray analysts wrote in a March 23 note.
"This confirms our belief that Apple Pay’s evolution will ultimately impact PayPal’s business," the analysts, led by Gene Munster, said in the note.
About 30 per cent of PayPal’s total payments volume in 2015 came from mobile devices, the analysts noted, estimating that at least 20 percent was from Apple iOS devices. That portion of the payments volume is at risk over the next several years, they said. The firm maintained its underweight rating on the stock.
Sterne Agee analysts initiated coverage on PayPal Thursday with a neutral rating and a $46 price target, "reflecting rich valuation as well as long-term potential risks to dominant position in eCommerce."
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