Traders bid up eBay after downgrade

Published Thu, Mar 19 20155:56 PM EDTUpdated Thu, Mar 19 20156:32 PM EDT

Two 'Fast Money' traders were among the many buyers of eBay as the shares gapped lower on a Wall Street downgrade. Piper Jaffrey said the eBay unit PayPal is facing increasing competition. First, it was Apple Pay. And now, Facebook, Samsung and regular banks are getting in on the act. Also, Paypal does not have an emerging presence in brick and mortar stores like Apple, the Thursday note stated. "We are cautious on PayPal as we believe it does need (a) point of sale product that consumers will use," wrote Piper's Gene Munster. "Over time, we believe competitors will take their existing in-store and in-app wallets and migrate it to mobile browsers, peer-to-peer transfers, and eventually to desktop browsers." Ebay fell as much as 3 percent in morning trading, but then nearly traded into positive territory by midday. Ebay happens to be one of the stocks to be debated on " Fast Money" tonight as part of the Madness challenge . The show is striving to find the best stock in the technology sector as part of this special 'tournament'. The traders will debate eBay vs Paychex. CNBC Pro got an exclusive preview of the traders' thoughts ahead of the show and two of them were standing by eBay and buying this dip. Both Karen Finerman and Brian Kelly believe that even with the emerging threats to PayPal, eBay shares are worth more than where they trade today because a spin-off of that unit is coming, which should unlock some value. "Ebay has two catalysts coming up in the next six to 12 months, which are the Sothebys auctions and the spin-off of Paypal," said Kelly. The company said this week that it will be streaming live Sothebys auctions where eBay customers can participate. "After the split, the pieces could trade with some takeover premium," said Finerman. But we may have a battle on our hands tonight as Paychex has been hitting on all cylinders. Paychex shares are up 11 percent this year compared to a gain of 2 percent for the S & P tech sector. The stock has gotten a boost from the strong dollar making multinationals unattractive as it derives all of its revenues in America. Read More What's the best tech stock? Microsoft vs. Cisco UPDATE: Indeed on Fast Money , Guy Adami and Jon Najarian believed Paychex was the better stock over eBay. Both thought the payroll company was more fundamentally sound. Paychex has a "3 percent dividend and they are a dividend grower," said Najarian. Host Melissa Lee had to go to the viewers and their tweets to determine the winner. And they choose...Paychex. So Paychex moves onto the second round. How Fast Money madness works: For this year's Fast Money Madness Challenge, 16 technology companies square off against each other. Eight of the leading stocks in the S & P information technology index will go up against eight of the laggards. For the next three weeks on "Fast Money" (5 p.m. ET), the four panelists will vigorously debate the stock matchups in our bracket. CNBC Pro subscribers will get exclusive access to previews of each matchup before the show. There will never be any ties because the viewers' Twitter vote counts as the fifth trader. The winner of each matchup will move on to the next round. Before each game to be played that night, just tweet your ticker picks to @cnbcfastmoney using the hashtag #fastmoneymadness. Then watch "Fast Money" each night to see your how your pick does in the game.

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Two 'Fast Money' traders were among the many buyers of eBay as the shares gapped lower on a Wall Street downgrade.

Piper Jaffrey said the eBay unit PayPal is facing increasing competition. First, it was Apple Pay. And now, Facebook, Samsung and regular banks are getting in on the act. Also, Paypal does not have an emerging presence in brick and mortar stores like Apple, the Thursday note stated.

"We are cautious on PayPal as we believe it does need (a) point of sale product that consumers will use," wrote Piper's Gene Munster. "Over time, we believe competitors will take their existing in-store and in-app wallets and migrate it to mobile browsers, peer-to-peer transfers, and eventually to desktop browsers."