NEW YORK (TheStreet) -- Shares of eBay (EBAY) surged 7.1% to $56.40 in morning trading Tuesday after the online marketplace announced it would spin off PayPal business into a separate, publicly-traded company in 2015.
The move comes after pressure from activist investor Carl Icahn for eBay to split, though the company had resisted Icahn's recommendation for much of 2014.
eBay announced the tax-free spinoff should occur in the second half of 2015.
Watch the video below for more on the eBay, PayPal split:
"For more than a decade, eBay and PayPal have mutually benefited from being part of one company, creating substantial shareholder value," said eBay CEO John Donahoe. "However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively."
Apple's (AAPL) introduction of Apple Pay, the company's own mobile wallet, may have also played a role in eBay's decision, as it would likely create more competition in the mobile payments space.
More than 44.2 million eBay shares had changed hands as of 11:11 a.m., compared to the average volume of 12,375,400.
Separately, TheStreet Ratings team rates EBAY INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate EBAY INC (EBAY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."