6 Oct 2014
When eBay bought paypal in 2002 I thought it was a great synergistic acquisition. I get why it's being spun off, To me, the only reason you'd want eBay in the current day is that you'll get shares of paypal as a tax free dividend in 2015. Paypal hasn't been able to beat the likes of Visa through in-store transactions despite supporting the method for some time, it's done quite a bit better in online sales - where it dominates.
PE NA (-0.11 EPS), PS 3.96, PB 3.56, PCF 49.39, Div NA, Institutional 77.4%. At the current price, you might be getting a reasonable price, I wouldn't pay much more than 51 for it. But at that price you're getting a dated internet sales company and a good internet transaction company. Which begs the question, why bother with eBay? The answer to that might be that you'll get a lot of Paypal stock, but maybe you wont. To me, the downside risk isn't worth it. Ebay is is clearly holding Paypal back, and the current price of eBay has the price of Paypal fully vested in it. I expect eBay is going to keep at least the 2.1 billion it payed for eBay and likely a bit more, up to double, which is a little vexing. If you buy eBay now, you're likely to get a company with a good balance sheet and a company with a balance sheet that looks good with a lot of post spin off cash, which would allow you to sell your worthless eBay stock to mitigate the cost of your Paypal stock. Coupled with the fact that Paypal may well shoot up precipitously once it's an independant company. Still, with both companies combined the eBay ticker is overbought, so I think I'd pay $50/share and sell any remaining eBay shares about 2 or 3 months after the split if I wanted Paypal - which is not a certainty as it's hard to tuss out the real value of Paypal or it's expected price.
When eBay bought paypal in 2002 I thought it was a great synergistic acquisition. I get why it's being spun off, To me, the only reason you'd want eBay in the current day is that you'll get shares of paypal as a tax free dividend in 2015. Paypal hasn't been able to beat the likes of Visa through in-store transactions despite supporting the method for some time, it's done quite a bit better in online sales - where it dominates.
PE NA (-0.11 EPS), PS 3.96, PB 3.56, PCF 49.39, Div NA, Institutional 77.4%. At the current price, you might be getting a reasonable price, I wouldn't pay much more than 51 for it. But at that price you're getting a dated internet sales company and a good internet transaction company. Which begs the question, why bother with eBay? The answer to that might be that you'll get a lot of Paypal stock, but maybe you wont. To me, the downside risk isn't worth it. Ebay is is clearly holding Paypal back, and the current price of eBay has the price of Paypal fully vested in it. I expect eBay is going to keep at least the 2.1 billion it payed for eBay and likely a bit more, up to double, which is a little vexing. If you buy eBay now, you're likely to get a company with a good balance sheet and a company with a balance sheet that looks good with a lot of post spin off cash, which would allow you to sell your worthless eBay stock to mitigate the cost of your Paypal stock. Coupled with the fact that Paypal may well shoot up precipitously once it's an independant company. Still, with both companies combined the eBay ticker is overbought, so I think I'd pay $50/share and sell any remaining eBay shares about 2 or 3 months after the split if I wanted Paypal - which is not a certainty as it's hard to tuss out the real value of Paypal or it's expected price.