As far as divorces go, the split up of ebay and PayPal has been so far a reasonably amicable one. What’s ironic is ebay bought PayPal for $1.5 billion in 2002, while its value today estimated to be $45 billion. Conversely ebay is today valued much lower at $30 billion. This has been a large driving force for the merger with active investor Carl Icahn stating “PayPal’s a jewel and eBay is covering up its value.”

ebay’s last quarterly results also seem to back this up showing PayPal’s revenue growing by 20% compared to ebay marketplace down 1%. In the release of final figures for the joint company (Q2) to June 2015 eBay reported earnings of $931 million, or 76 cents per share. This is up considerably from the same period last year which came in at $883 million, or 70 cents a share. However PayPal’s dominance is obvious, contributing $2.26 billion of eBay’s Q2 revenue. ebay’s marketplace business contributed $2.12 billion to the joint company.

Another reason for the split is that they are both very different businesses operating in different markets. Elon Musk one of the cofounders of PayPal agrees: “It doesn’t make sense that a global payment system is a subsidiary of an auction website. It’s as if Target owned Visa or something.” Separating them will allow each to focus on their own set of unique priorities.

There’s another factor: technology markets change very quickly and a business needs to be responsive to change if they are to survive. PayPal in particular faces new competition with Apple Pay (which allows payments via phone). Apple has shown an ability to make complex technology easy to use for their customers – and they have many millions of dedicated followers. The impact of Apple Pay on PayPal’s business cannot be underestimated.

The benefit to PayPal investors is clear with both Elon Musk and former chief operating officer David Sacks predicting that PayPal could in the near future be worth more than $100 billion. PayPal has already been expanding its business with a series of acquisitions such as Xoom (which transfers funds from America to many developing countries), Paydiant (which helps retailers to operate mobile wallets) and Braintree (which processes transactions for mobile apps). The separation from ebay will put PayPal in a strong position to continue this trend with around $6 billion in cash reserves.

The way forward for ebay seems less certain. Part of the problem today is that its growth was pioneered on being one of the first auction sites. Today it is viewed as an auction site, when consumers are tending to prefer a quick online purchase direct from stores. Never-mind that 80% of goods on ebay are offered for sale not auction, the perception persists. However ebay’s a stable investment too. US 85 billion worth of transactions were carried out on ebay last year. It’s hard to imagine that being rivalled by a competitor. Also without PayPal ebay will have more cash to focus on its own bread and butter operations.

All this is likely to benefit investors in both companies. While the saying goes that an entity can be worth more than the sum of their parts, in this case the reverse is true, the valuation of the two separate companies after spin-off is likely to be greater than their valuation as one.

http://investorsking.com/the-divorce-of-ebay-and-paypal/

Not bad... But PayPal should allow us receive funds in Nigeria na.
I don tire for backyard means.

I dnt understand a thing

kenny1795:
I dnt understand a thing

Paypal is now free to run its own business like every other technological company, unlike when it was a subsidiary of ebay. Good news for all Paypal shareholders

feldido:
Not bad... But PayPal should allow us receive funds in Nigeria na.
I don tire for backyard means.

It will happen now, several business decisions of Paypal was hindered by ebay/Paypal brand. It wasn't growing at the same pace with competitors even though it has the potential.

The break up is necessary for growth, though its a good business strategy. The next thing is for Paypal to keep expanding because Apple is launching its own payment system called Apple Pay and so is Facebook test running payments in messenger.

what is next for eBay now considering the fact that alibaba, amazon etc are already doing all it does, besides hope it won't fold up make share holders no go faint!!!!!

They better split..
The troubles to open a paypal account might decrease
Maybe we will have more reasons to use paypal
Maybe ebay will ship more to Nigeria now...
As for me, business as usual