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.

PayPal Spinoff Anticipation Makes eBay Inc. (EBAY) A Good Investment

eBay Inc. (NASDAQ:EBAY) continues to attract attention from investors with many looking to tap into the value that would be unlocked with the upcoming spinoff of PayPal. During an interview on CNBC, BGC Financial analyst, Colin Gillis, reiterated that eBay continues to struggle in the online marketplace with its poor show on the other hand offset by a better performing PayPal.

Most Expensive eBay Items

PayPal has remained a success story for eBay Inc. (NASDAQ:EBAY) having increased its user base by 4.6 million which Gillis maintains justifies his valuation estimate of $40 billion. EBay on the hand continues to show signs of weakness having posted a weaker first quarter guidance of between 68 cents and 71 cents against consensus estimates of 76 cents.

“If you are investing in eBay Inc. (NASDAQ:EBAY) you are looking beyond the next few quarters because you want to see the PayPal value unlocked. If it was going to be a great quarter, they wouldn’t be breaking up the company. So the metrics we care about are the PayPal metrics. We know the marketplace is struggling it delivered struggled results, but the PayPal metrics are great they did really well in Mobile,” said Mr. Gillis.

eBay Inc. (NASDAQ:EBAY) has already announced that it is to cut its workforce by 7% amounting to 2,400 positions something that Gillis expects to accord the company more free cash flow. The company has also reached an agreement with Carl Icahn, which the analyst believes will accord PayPal with good governance heading into the IPO. A breakup, in this case, would also position PayPal as a potential acquisition target from would-be suitors.

 A breakup of eBay into a possible three parts has thrown into doubt eBay Inc. (NASDAQ:EBAY)’s prospects, in the long run, which CNBC’s Pete Najarian maintains still remain positive.

“[…] The new active users for marketplace; that number was up as well. So they are getting the hits, and it’s all about the metrics and I think Carl Icahn can obviously break that down better than I can.  I don’t think that this is a dead business, I don’t think it is a falling business, it has slowed there is no doubt about it. Internationally it is much slower than it is here in the U.S but that is an area I think they could grow out,” said Mr. Najarian.

Steve Grosso, on the other hand, remains skeptical about buying eBay at the current margins as the stock remains purely a PayPal break up play. A drop to $50 a share prior to PayPal spinoff would be a perfect entry point for Grosso in terms of risk reward as the stock has been found to be trading between $50 and $57 a share.

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.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.