By Sohini Podder

(Reuters] -PayPal Holdings Inc. on Tuesday predicted a lower first quarter revenue and profit than expected as it prepared to absorb a loss from eBay Inc. (NASDAQ)’s continuing move to discontinue its payments services. This has caused its shares to fall 17.4%.

PayPal (NASDAQ: ) announced that its operating agreement has been terminated with eBay. The online marketplace is now transitioning to its own payment platform, which will impact transaction volumes.

Chief Executive Officer Dan Schulman stated that EBay’s transformation is likely to cause $600 million in revenue pressure during the first half this year.

Schulman stated, “In half two of the year, i look forward to not having to adjust for eBay. I will instead let our core results speak for them.”

PayPal emerged from eBay in 2015 after spending over a decade within the company’s fold.

Jeff Tomasulo is chief executive officer at Vespula Capital Management. He stated, “Paypal was missing on their bottomline and their guidance came out light. That’s a double-whammy.”

Many of these stocks were pushed up over the years, and they have high valuations. Investors bail when they show signs of cracks.

According to Refinitiv’s IBES data, PayPal projects a 6.6% increase in revenue. This is far less than analysts had predicted.

PayPal received $340 billion of payments during the third quarter. This is 23% more than a year ago. Meanwhile, Venmo, its peer-to–peer payment platform, processed $61 billion.

California-based Paidy was acquired in September by the San Jose company. It added 9.8million net new active accounts.

Accordingly, the company’s fourth-quarter total revenue increased by 13% to $6.9billion and earned $1.11 per share. Both numbers are close to estimates.