Why Jim Cramer Thinks eBay Is a Buy

Jim Cramer explains why he thinks eBay is a buy.
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Elliott Management, the hedge fund known for its activist investing, disclosed that it has a 4% stake in eBay (EBAY) - Get Report Tuesday morning.

The hedge fund said that eBay's management should "turn its singular attention to growing and strengthening marketplace", asserting the group is "far from broken, and its future should be bright". Elliott's five-step plan, the activist said, outlines a value creation opportunity that would take the path of Ebay shares to between $55 and $63 each by 2020, reported TheStreet's Martin Baccardax.

eBay said that it will "carefully review" the letter from Elliott.

eBay said both its board and its leadership team "regularly engage" with shareholders and value their input following a letter from Elliott that pressed online marketplace to adopt a plan to increase shareholder value, accusing management of "underperforming its peers and the market for a prolonged period of time."

"We are focused on delivering value for our shareholders, customers and employees by driving the best choice, the most relevance and the most powerful selling platform to deliver growth," eBay said in a statement. "Accordingly, we appreciate Elliott's recognition of the strength and power of eBay's business and will carefully review and evaluate Elliott's proposals. We look forward to the opportunity to engage with Elliott, as we do with all shareholders."

Jim Cramer had a positive reaction to Elliott's stake and said that he thinks shares are a buy.