This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

PayPal Head Quits, Icahn's Case for eBay Spinoff Revives: StockTwits

NEW YORK (TheStreet) -- Facebook  (FB) has lured away PayPal head David Marcus from eBay (EBAY - Get Report). The move leaves a big hole in eBay's organization and an even bigger question for investors on is a PayPal spinoff now more or less likely?

$EBAY Ichan wants to spin of Pay Pal to unlock value. Head guy leaves, people could be missing the point on another reason Marcus left ? Phil (@SwedeSkyview) Jun. 10 at 09:24 AM

Activist investor Carl Icahn, who owned 27.8 million eBay shares as of March 31, has pressured the company to spin off PayPal into a separate public company.

It's not difficult to understand his reasoning. PayPal is growing far faster than eBay. The volume of payments processed by PayPal ballooned 27% in the first three months of the year. Meanwhile, the value of goods sold on eBay grew 12%. PayPal's off-eBay business grew faster than its business on eBay's site, with payments volume expanding 32% and 15% respectively. PayPal is also extremely profitable, bringing in $1.8 billion in revenue during the prior quarter.

The Icahn vs. eBay management fight got ugly at times this year, with Icahn vehemently criticizing eBay CEO John Donahoe and board. EBay's team countered with arguments that eBay's business is fundamental to PayPal's growth -- it's the way the majority of shoppers pay for goods on the site -- and that Icahn, in essence, doesn't get technology.

Until today, it seemed eBay had won the case for keeping PayPal under the eBay umbrella. Icahn backed off his campaign in April saying that, while he still believes PayPal should be a standalone company, he would pursue his agenda with management, rather than via open letters to shareholders. Investors were largely disappointed by the news of eBay's seeming success in the matter. The stock dropped 3% the day Icahn dropped his public battle.

But Marcus' departure reopens the case for a PayPal spinoff and leaves investors with new questions central to PayPal's continued success. Did Marcus leave PayPal because eBay refused to separate the company? And, if so, does that mean PayPal will lose top talent if eBay stubbornly continues to hold onto it?

$EBAY Who wouldn't want to go to $FB? Does Marcus' departure signal something else wrong when top talent leaves? ? Rayne Woo (@Rayneman) Jun. 10 at 09:48 AM

If PayPal is suffering under eBay's leadership and losing top talent, than Icahn certainly has more ammunition to argue for a spinoff.

eBay, of course, argues that Marcus simply wanted to leave because he's an "entrepreneur at heart." Marcus took the job at PayPal after selling his mobile payment company Zong to eBay about three years ago for $240 million. His new role, leading Facebook's messaging products, does seem more likely to foster that spirit more than running a largely established, multi-billion payments business at an older tech company.

Some investors certainly buy that argument.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
EBAY $59.08 1.32%
AAPL $126.41 -1.66%
FB $81.21 0.39%
GOOG $575.33 0.34%
TSLA $200.63 -0.89%


DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs