Updated from 10:09 a.m. to correct revenue numbers for eBay.
NEW YORK (TheStreet) -- On Friday eBay (EBAY) finally announced when it would be completing the spinoff of its payments division PayPal. The company had been discussing the spinoff for months now, but it will all be over on July 17 when PayPal becomes an independent company separate from eBay.
On July 8, eBay shareholders will receive one share of PayPal common stock for every share of eBay common stock they own. The distribution will be finalized on July 17, and on July 20 PayPal will begin trading on the Nasdaq under the ticker "PYPL."
The two companies hope that as independent entities they will be able to focus more on their respective core businesses -- marketplaces and payments.
While eBay has been struggling a bit -- with $8.8 billion in revenue from Marketplaces in 2014, up from $8.3 billion in 2013 -- PayPal has been doing relatively well.
In the most recent quarter, PayPal revenue exceeded Marketplaces revenue for the first time ever, with PayPal bringing in $2.11 billion and Marketplaces bringing in $2.07 billion. Despite there being an increasing amount of competition in the payments space, PayPal has a head start and has quite the foothold in the industry with more than 165 million active customer accounts. In 2014, PayPal processed $235 billion in payment volume and handled one billion mobile transactions across 10 million merchants around the world.
Here's what analysts are saying ahead of the spinoff:
Doug Anmuth, J.P. Morgan (Neutral, $64 PT)
"Overall, we are modestly raising our PT on eBay Inc. to $64 to account for higher SOP valuations for both PayPal and eBay. We currently value PayPal at an EV of $38B, market cap of $44B, and a post-spin share price of $36. We currently value eBay at an EV of $30B, market cap of $33B, and a post-spin share price of $29.
"As a standalone company, PayPal immediately becomes one of the more exciting stories in our payment processing coverage universe, with: 1) mid-teen organic revenue growth, more than 40% faster than our broader coverage universe; 2) high relative exposure to digital commerce, one of the fastest growing areas in payments, & 3) strategic value based on strong brand recognition & global scale (160M users). We are bullish on PayPal in the short run (the next two years), but acknowledge the digital payments landscape is evolving, and strategic decisions and management execution will drive L-T sustainability, arguably more than any name in our coverage universe.
"We view standalone eBay as both returning to its roots & also pushing further innovation as it pivots more toward SMBs & consumers while using structured data to improve the user experience, drive better merchandising, & strengthen the search process. Some of eBay's playbook sounds familiar, & management will now need to show that it can execute better than over the past few years."