Gene Munster Explains His eBay Downgrade

eBay Inc (NASDAQ: EBAY) was downgraded on Thursday by Piper Jaffray analyst Gene Munster to Underweight. Munster was on CNBC to explain the reasons behind the downgrade and the competition it faces from the payment platforms of Apple Inc. (NASDAQ: AAPL), Google Inc (NASDAQ: GOOGL)(NASDAQ: GOOG) and Facebook Inc (NASDAQ: FB).

Using Less Products

"We understand that the valuation has some support here, so it's an attractively valued stock," Munster said. "But, our core issue is, ‘Will you use eBay products more in two years or less in two years?' And our belief is you are going to use them less."

Related Link: Piper Jaffray Cites Future Competition In eBay Downgrade

Challenges In Both Businesses

Munster was asked why he thinks consumers are going to use fewer eBay products in the next two years. He replied, "Obviously, they are going to have two different businesses – PayPal's side, everyone has talked a lot about Apple Pay. We think that they are going to have some exponential growth.

"But the other players, like Google Wallet and Facebook and Snapcash and Samsung, are all getting into the payment space."

He continued, "On the marketplace side, they have had some challenges that have been kind of more one time and focused around their password reset. Some of the Google analytics changes. But, ultimately, we think that the marketplace is going to grow slower than the overall e-commerce growth.

"So, if you put those two together, our belief is for tech stocks to work, they need to gain market share. And we think that both of their businesses will lose market share over the next couple of years, and that is why we downgraded," Munster concluded.