"Moving away from PayPal (PYPL.O), lowering the costs of selling products on the marketplace makes eBay a more significant competitor because it lowers the relative cost versus others including Amazon (AMZN.O)", said D.A. Davidson & Co's analyst Tom Forte.
eBay customers will reportedly be able to nominate Paypal as a payment option until July 2023. Shoppers purchased $24.4 billion in goods on EBay properties in the final quarter of 2017.
Other analysts, however, said PayPal, which has been eBay's preferred provider for the past 15 years and will remain a payment page option on the platform for the foreseeable future, had the scale to ride out the blow. It says it handles more than 200 different payment methods and over 150 currencies. PayPal hasn't provided analysts with much color on the impact yet.
EBay said it would move as quickly as possible to complete the transition within the parameters of its deal with PayPal, which remains in place through mid-2020.
EBay expects full-year earnings in the range of $2.25 to $2.30 per share, with revenue ranging from $10.9 billion to $11.1 billion.
The announcement surprised some investors, who expected the companies to announce an extension to their operating agreement.
PayPal down more than 8% after eBay drops
Transactions through eBay account for roughly 13 percent of total payments processed by PayPal, whose shares sank more than 8 percent in response on Thursday.
EBay and PayPal's divorce just got messier. The separation included an agreement that EBay would continue to use PayPal to process payments on the site.
PayPal separated from EBay in 2015 to concentrate on expanding its electronic transactions business without being shackled to the slow-growing online marketplace.
For the quarter ending March, eBay forecast revenue between $2.57 billion (1.81 billion pounds) and $2.61 billion and adjusted earnings of 52 cents to 54 cents per share.
(EBAY) on Wednesday reported a fourth-quarter loss of $2.6 billion, after reporting a profit in the same period a year earlier.
EBay said its gross merchandise volume - the value of all goods sold on its websites - climbed 9.7 percent to $24.43 billion in the fourth quarter ended December 31.
Police in this Muslim-majority country force 'manly makeovers' on transgenders
Homosexuality and gay sex are legal everywhere in Indonesia except in Aceh. The Aceh police operation drew criticism from Amnesty International .