Ebay shares soar after Paypal spinoff announcement

eBay
An amicable separation

Stock markets universally applauded Ebay's decision to spin off popular online payment processing arm, Paypal, some time next year.

They drove the share prices of the online auction site up by more than 7.5%; stocks fell slightly overnight but are still close to their 52-week high.

A number of changes will happen in what amounts to a post-demerger of two almost-equals. Current CEO (and president) John Donahoe and his CFO, Bob Swan will oversee the separation and sit on both boards of the new Ebay and new PayPal.

The current Ebay Marketplaces, Devin Wenig, will become the new CEO of Ebay while American Express executive Dan Schulman will become the President and CEO of PayPal. Schulman was formerly the Group President of Enterprise growth at AMEX where he oversaw the company's global strategy to expand mobile and alternative online payment services.

Three conclusions

The decision to split Ebay into two separate entities hinges on three conclusions: opportunities have arose following a changing competitive landscape - Ebay and PayPal consider the benefits of their existing relationships as "declining" and this is, according to Ebay's board, the best path for delivering sustainable shareholder value.

Just like VMWare and EMC, spinning off business units can sometimes be very lucrative and there's no reason why this shouldn't be the case for Ebay and Paypal.

Ebay without Paypal generated $9.9 billion over the last public year and has 149 million active buyers. PayPal has 152 million active registered users with revenue of $7.2 billion over the last year. It is the growth rate however that will get investors interested; PayPal annual revenue growth is almost double that of Ebay.

Desire Athow
Managing Editor, TechRadar Pro

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website builders and web hosting when DHTML and frames were in vogue and started narrating about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium.

Latest in Pro
Hands typing on a keyboard surrounded by security icons
The psychology of scams: how cybercriminals are exploiting the human brain
Stress
Complexity of IT systems could be increasing security risks for businesses
Ai tech, businessman show virtual graphic Global Internet connect Chatgpt Chat with AI, Artificial Intelligence.
CEOs think they might lose their jobs if they can't deliver on AI
A person using a desktop computer.
The role of automation in achieving sustainability goals
Cyber-security
The definitive guide to credential collaboration
Eurocom Raptor X18
At $15,000, this massive 256GB RAM laptop makes Apple's MacBook Pro look affordable, tiny and very, very slow
Latest in News
Stress
Complexity of IT systems could be increasing security risks for businesses
Ai tech, businessman show virtual graphic Global Internet connect Chatgpt Chat with AI, Artificial Intelligence.
CEOs think they might lose their jobs if they can't deliver on AI
Tony Hawk's Pro Skater 3+4
From Ace of Spades to Them Bones, Tony Hawk's Pro Skater 3+4's soundtrack is already looking excellent
An AMD Radeon RX 9070 XT made by Sapphire on a table with its retail packaging
AMD describes its recent RDNA 4 GPU launch as 'unprecedented' and promises restocking the Radeon RX 9070 XT as 'priority number one'
The Google Gemini logo against a black background.
I tried Gemini's new AI image generation tool - here are 5 ways to get the best art from Google's upcoming Flash 2.0 built-in image upgrade
An image of the Samsung Galaxy S25 Ultra from a hands-on event
Samsung Galaxy S26 Ultra could resurrect an intriguing camera feature