eBay Inc. (EBAY) has Seen its Child Grow Bigger than Itself

eBay Inc. (NASDAQ:EBAY) is planning to release the beast of internet transactions. PayPal’s spinoff will virtually split the company in half, but it also might result in more favorable conditions in the longer term, states an article on MarketWatch.


PayPal and Braintree gathered $1.74 billion in revenues while eBay Inc. (NASDAQ:EBAY)’s core market posted revenues of $1.72 billion for the second quarter. These numbers clearly state the growing power of the payments and transfers business. Besides, PayPal has been eBay Inc. (NASDAQ:EBAY)’s fastest growing part, in the second quarter it surpassed 150 million active users and for the fifth quarter in a row it expanded merchant services total volume. Furthermore, Braintree, a payment processing start-up proved to be a noteworthy investment after it launching a tool that allows developers to integrate both PayPal and Braintree in apps with less than 10 minutes. All these lead to the conclusion that the child company can be independent.

One more thing to note is that once the spinoff takes place, PayPal will see the opportunity of working easier even with eBay Inc.’s (NASDAQ:EBAY) competitors.

“E-commerce sites such as Amazon.com and Alibaba Group Holding Ltd. will be hesitant to fully integrate PayPal into their product as long as it is tied to the competition, […] An independent PayPal could find itself in a more amenable business environment,” SNL Financial analyst, Seth Shafer, was quoted as saying.

Analysts seem to favor the division, mostly due to the evidence presented above, but also for the fact that eBay Inc. (NASDAQ:EBAY), which refrained from pursuing this state of the world, has finally seen the advantages of such a deed. Investors might also find it more attractive, assuming there will be no drop in cumulative profitability of the two entities. As long as there is no clear evidence of the opposite occurring, it is worth changing in order to delimit opportunities and have some extra flexibility for the future. Moreover, citing a recent report, it should prove wise even for the case of Apple Inc.’s (NASDAQ:AAPL) upcoming release.

Disclosure: none

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