Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

eBay Inc (EBAY) Thought It Would Be More Than Just A Reaction To Low Nominal GDP

Boredom is probably one of the best catalysts to inspiration and creativity. Now, when companies are struck by a stagnant environment, they usually try to improvise as efficiently as possible. eBay Inc (NASDAQ:EBAY) delayed the PayPal split up to the point where nothing else could be done to get some growth for its current $51.86 price. Bloomberg’s special guests Raymond James Vice Chairman Fred Lane and Nuveen Asset Management Chief Equity Strategist Bob Doll argued why these break-up strategies are pursued en masse.


“Low nominal GDP means ‘I’m struggling to grow’ and if I’m a CEO or if I’m the board I have to be creative. I may go buy a company to try to make it happen or split my company up,” said Bob Doll.

eBay Inc (NASDAQ:EBAY) is just the most renewed company that is going to pursue a division of businesses, but when one looks at data regarding all the upcoming spin-offs, he or she can see that there are about 3 just in the following two to three weeks. Sometimes management is seeking to maximize its income through a split or it just does so because the board pushed such a decision, or there’s an activist investor, like Carl Icahn in eBay Inc (NASDAQ:EBAY)’s case, that is looking for higher stock price for its long positions. Whichever may be the case, if applicable, a spin-off can assure a higher cumulative value for the company.

“We’re talking about disparate value. We’re talking about here’s a company and it’s growing at 8% or 7% and it has a big enough to be a stand-alone public company within it that’s growing at 18%  […] So, some of these spin-off make more sense, some make less sense but some are absolutely compelling,” explained Fred Lane.

eBay Inc (NASDAQ:EBAY) had to take some actions as the company’s down almost 6% year to date, so freeing up PayPal can prove to be a brilliant move. However, it’s not so clear what will become of core eBay Inc (NASDAQ:EBAY) after the procedure as it appears to be in a less favorable position compared to its daughter company.

Disclosure: none
Warren Buffett and BillionairesFree Report: Warren Buffett and 12 Billionaires Are Crazy About These 7 Stocks

Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW for all the details.