Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
Login Archives Your Team About Us FAQ
[mmpazkzone name="azk58712-mobile-nav" network="9794" site="307044" id="222451" type="5"]
  • Subscribe
Enter stock ticker or keyword
×
[mmpazkzone name="azk58712-mobile-sticky" network="9794" site="307044" id="222451" type="5"]
Join 100,000+ Like-Minded Investors Today
Twitter
Tags: Top News

The PayPal Stock Spin-Off Date Is Set - Here's How to Invest Now

By Kyle Anderson, Associate Editor, Money Morning • @KyleAndersonMM • June 30, 2015

View Comments

Start the conversation

Leave a Reply Click here to cancel reply.

You must be logged in to post a comment.

A PayPal stock spin-off date is just weeks away, with PayPal (Nasdaq: PYPL) stock set to begin trading on the Nasdaq on Monday, July 20.

paypal stock spin-offEBay Inc. (Nasdaq: EBAY) officials had announced plans for the PayPal spin-off in September 2014. But board members hadn't formally announced the approval until last Friday.

Through the PayPal spin-off, eBay stockholders as of July 8 will receive one share of PayPal stock for every share of eBay stock they own.

After the split, eBay will focus solely on e-commerce, while PayPal will remain focused on digital payments.

The two companies have a five-year contract in place that assures dependable income for PayPal following the split. eBay initially purchased PayPal for $1.5 billion back in 2002.

"eBay and PayPal are two great, special businesses," eBay President and CEO John Donahoe said in a statement. "As separate, independent companies, eBay, led by Devin Wenig, and PayPal, led by Dan Schulman, will each have a sharper focus and greater flexibility to pursue future success in their respective global commerce and payments markets."

eBay's biggest goal now is growing its user base. The platform has 25 million sellers and more than 157 million active buyers. Shoppers can browse roughly 800 million live listings at any time, according to company officials. The company had revenue of $8.8 billion in 2014.

PayPal had more than 165 million active accounts and processed more than $235 billion in payments in 2014. It had revenue of $8 billion in 2014.

While they have similar revenue figures, these companies are moving in two very different directions - which is why a PayPal stock spin-off makes sense...

How to Invest Following the PayPal Stock Spin-Off

In 2015, EBAY stock has climbed 7.7%, compared to a loss of 0.8% for the Dow Jones in the same time.

[epom key="ddec3ef33420ef7c9964a4695c349764" redirect="" sourceid="" imported="false"]

And while it has outperformed the market, EBAY stock will be much less desirable following the spin-off. The more enticing profit opportunity is with PayPal stock.

PayPal has been eBay's fastest-growing division. In Q1 2015, PayPal grew revenue by 16%. The Marketplaces division, which eBay will retain following the PayPal spin-off, saw sales dip 7% in the first quarter.

Q1 was also the first time that PayPal had higher revenue than Marketplaces. PayPal's revenue was $2.11 billion in the quarter compared to $2.07 for Marketplaces.

While the two companies will still work together, PayPal is free to form partnerships with other major e-commerce platform.

Alibaba Group Holding Ltd. (NYSE: BABA) is the most likely partner for PayPal. It already has its own payment service, Alipay, but a partnership makes sense as Alibaba attempts to bring its brand west.

Analysts at JPMorgan Chase & Co. (NYSE: JPM) expect PYPL stock to trade near $36 per share after the PayPal spin-off with a market cap of $44 billion. They project $29 per share for EBAY stock and a market cap of $33 billion.

PYPL should be volatile following the PayPal stock spin-off on July 20 as new investors enter the stock. We recommend waiting several quarters to invest in PayPal stock to avoid this volatility. That will also give investors time to digest several earnings reports and see how the firm is doing on its own.

The Bottom Line: The PayPal stock spin-off is just weeks away, and PYPL will hit the market on July 20. When it comes to investing in EBAY stock or PYPL stock, PayPal is the better choice. The company's revenue is growing and will make a good business partner with other e-commerce platforms. Expect PayPal stock to be volatile when it first hits the market.

Follow us on Twitter @KyleAndersonMM and @moneymorning.

Like us on Facebook: Money Morning.

Profit Alert: Since Money Morning Executive Editor Bill Patalon launched his Private Briefing program just a few short years ago, he's recommended 192 stocks that have either doubled or tripled in value. The service has completely revolutionized the way people invest. Keep reading to find out more about his extensive research and premium stock picks...

ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us How Money Morning Works FAQs Contact Us Search Article Archive Your Team Text Messaging Terms of Use
TOPICS
AI Investing Best Stocks to Buy Stock Forecasts Stocks to Sell Now Technology Stocks Best REITs to Buy Now IPO Stocks Penny Stocks Dividend Stocks Cryptocurrencies How to Trade Options Best Trades to Make Now Options Trading Strategies Weekly Trade Recommendations Income Investing Guide Retirement Articles Special Investing Reports Meet Our Experts
PREMIUM SERVICES
Money Map Press Home Fast Fortune Club Microcurrency Trader Rocket Wealth Initiative Quantum Data Profits Darknet Alpha Accelerators Brutus Alerts Resource Traders Alliance Rob Roy Trader Long-Term Equity Profits

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information