8 Facts About the EBay-PayPal Spin-Off
We’ve been hearing a lot of news about EBay’s spin-off plan on PayPal over the past several months. Reports say that this eBay-PayPal spin-off will leave PayPal with $5 billion cash to finance its growing operations. So what exactly happened?
From the big announcement in September 2014 to eBay’s latest performance in the stock market, here are the 8 facts about the EBay-PayPal spin-off. These are based on the report, reviews and press releases of more than ten online reliable sources of information.
1. On September 2014, eBay announced that its Payment division PayPal would split as a new company in 2015. EBay also confirmed that the planned spin-off would happen in the second half of 2015.
2. On January 2015, eBay announced that it would cut about 7% of its workforce, or around 2,400 positions, globally within the quarter. This massive layoff is part of the cost-cutting measures relative to the spin-off of PayPal. In the last week of February 2014, eBay and PayPal began notifying employees whom are about to loose their jobs as part of the cut measures.
3. According to eBay, the eBay-PayPal restructuring and separation costs are expected to be between $350 million to $400 million for the entire year of 2015.
4. In connection to the future direction of eBay, Wall Street analysts have identified Alibaba, Google and Amazon as potential acquirers of eBay and PayPal.
5. EBay announced early this year that it is currently exploring a sales or IPO of its Enterprise division after the spin-off.
6. EBay also announced a deal with Carl Icahn, an activist investor and eBay’s largest active shareholder, to name Jonathan Christodoro to eBay’s BOD. EBay will also add two Wall Street bankers to its board. This move will expand their number of directors to 15.
7. Analysts estimated that PayPal will be worth $40 billion as soon as it becomes a standalone publicly traded company. In 2013, PayPal recorded a total of $180 billion payment transaction in 26 currencies across 193 nations. That was a 20% increase in net revenue equivalent to $6.6 billion – 41% of eBay’s total and 36% of its profits.
8. In the fourth quarter of 2014, eBay Enterprise revenue grew by 9% year-over-year, from $407 million to $443 million. eBay Marketplaces revenue grew by just 1% year-over-year, from $2.29 billion to $2.33 billion. eBay Payments revenue grew by 18% year-over-year, from $1.83 billion to $2.2 billion. This is the first time the Payment segment of eBay has crossed the $2 billion threshold. Total revenue for eBay grew by 9% year-over-year, from $4.53 billion to $4.92 billion. EBay’s quarterly earnings was $0.90 per share, beating the consensus estimate of $0.89.
According to market analysts, there is a potential for eBay’s current stock to climb to more than 60% within the next 18 months. EBay (NASDAQ: EBAY), at this writing, opens at $58.07.
