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PayPal being used on the Samsung Galaxy S5.
PayPal being used in conjunction with the fingerprint scanner on the Samsung Galaxy S5.

eBay shares are not getting a bump from Wall Street today, following Tuesday’s announcement that it is spinning off PayPal into a separate company.

Shares of the San Jose-based company are trading lower at $55.69 a share, down 1.6 percent, or nearly $1 this morning.

Three analysts downgraded the stock today over concerns that the split will not end up creating more value. But other theories go so far as to say that eBay is being punished for locking itself out of a deal with Apple to participate in Apple Pay, the phone maker’s new mobile payments system that will be available on the latest iPhones and the Apple Watch.

Jefferies & Co.’s Brian Pitz said he would rather own Amazon stock instead of eBay, and cut his rating to Hold from Buy. “The proposed spin-off will add a yet unknown amount to operating costs over the next 12 months,” he added. JMP Securities’s Ronald Josey cut his rating to Market Perform from Market Outperform, adding that the spin out is a “good move long-term,” but the shares won’t do much the next year, Barron’s reports.

John Donahoe
John Donahoe

But other reasons for the declines have to do with theories that eBay’s big mistake came when they partnered with Samsung on a fingerprint reader, Bank Innovation reports. According to the publication, sources close to PayPal and Apple says that PayPal was going to be one of the “preferred payment” processors for Apple Pay. But then, PayPal partnered with Samsung on the Galaxy S5 fingerprint scanner, which allowed customers to make payments using PayPal by swiping your finger along the scanner.

Shortly after the device was released, PayPal went on the offensive after a German-based security company demonstrated how a hacker could unlock the Samsung Galaxy S5 and put a PayPal user’s account at risk. In fact, in an interview with GeekWire, eBay’s senior security adviser Brett McDowell dismissed that the “hack” was a serious threat to PayPal customers.

The deal was supposedly forced on to PayPal by eBay’s CEO John Donahoe. PayPal’s President at the time, David Marcus, left shortly after for Facebook. But whether that singular deal could lead to the company’s break-up, to Donahoe’s departure and a complete shake-up of the company, it’s hard to speculate.

Still, investors seem to be treading lightly, not willing to assume that all of the changes announced yesterday will lead to more value, or that two companies will necessarily be worth more than one.

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