24/7 Wall St.: EBay (EBAY): Spinning Off PayPal
EBay (EBAY) can post pretty good results, and the market does not care. Yesterday, the online auction company put up an earnings increase of 26% on a revenue pop of 24% to almost $2.2 billion. EBay was a bit cautious about what would happen the rest of the year, but, in a recession, the numbers were awfully good.Wall St. traders did nothing. EBay shares barely moved. The company trades at $32, down from a 52-week high of $40.73. Something is wrong.
The EBay’s core auction business is not growing as fast as the company as a whole. Its revenue was up only 14% year-over-previous-year. The PayPal operations grew at 34%.
The fact of the matter is that, with a market cap of $42 billion, the value of PayPal is trapped inside the company. Its revenue run-rate is almost $2 billion a year and it grows at a rate nearly double that of the auction business.
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