eBay's Ticker Might Be 'PYPL' in Three Years

Christa Quarles, the Thomas Weisel Partners analyst who covers eBay (EBAY), had a throwaway line about last week's earnings from the auction and payment company: "We like to joke that they are changing the ticker symbol to PYPL."

She's referring to the large and growing part of PayPal within the eBay empire. Even as eBay's core auction or marketplace business saw revenue drop 18% in the last quarter to $1.22 billion, the PayPal division grew revenue 11% to $643 million.

At the recent analysts' day a few weeks back, eBay CEO John Donahoe and PayPal President Scott Thompson both clearly spelled out how the PayPal group was poised to dominate the world of online payments for years to come: Think the online equivalent of Visa (V) and Mastercard (MA).

Donahoe even went so far to say, the "opportunity at PayPal is bigger than the opportunity at marketplace."

Today, Visa trades at a forward P/E of 18 times, Mastercard is at 13 times and eBay is at 10 times. eBay has roughly the same market cap as Mastercard. I'm not a fan of quick fixes, but there's a compelling argument to make for changing eBay's name to PayPal with a PYPL ticker.

It doesn't make sense to do this today perhaps, but it will soon. PayPal is the core to an eBay turnaround in the next couple years.

Disclsoure: No positions

Comments

[decoflair:]

This idea certainly causes me to take a closer look at Ebay.

Apr 29 05:55 AM

[Dave White:]

I wrote about this very same thing 8 months ago. It makes sense as PayPal has become the single largest portion of eBay's gross and net income.

Here is the article I wrote in August: ecommerce-marketing-ra.../

Apr 29 08:24 AM

[fatseal:]

Since paypal is required on ebay, I just don't shop on ebay. Haven't in a year and won't ever again. Why? Because for one thing I'm a seller, and that's usually enough to end a love affair with ebay, but more importantly, I can't find what I want on ebay anymore. Most of the sellers I used to buy from are gone, the selection is not there anymore and search is frustrating. I shop elsewhere now, and pay with Google or RME whenever I can. Whatever "it" is, you can't find it on ebay anymore.

They want to be overstock--martazon. Good luck with that. All those venues exist, and they've been doing what they do for a long time, they're good at it. Ebay is not. They've improved themselves to death.

Apr 29 09:04 AM

[Yankee Trader:]

eBay is going down but Paypal going up because all the small sellers such as us have left or are in the process of leaving eBay but we still accept Paypal on our new alternative sites. Nice thing about the alternative sites is WE CAN CHOOSE what type of payment to accept. Nobody dictates how we run our businesses like eBay does.

Apr 29 09:18 AM

[fatseal:]

Since paypal is required on ebay, I just don't shop on ebay. Haven't in a year and won't ever again. Why? Because for one thing I'm a seller, and that's usually enough to end a love affair with ebay, but more importantly, I can't find what I want on ebay anymore. Most of the sellers I used to buy from are gone, the selection is not there anymore and search is frustrating. I shop elsewhere now, and pay with Google or RME whenever I can. Whatever "it" is, you can't find it on ebay anymore.

They want to be overstock--martazon. Good luck with that. All those venues exist, and they've been doing what they do for a long time, they're good at it. Ebay is not. They've improved themselves to death.

Apr 29 09:20 AM

[Allan kraig:]

Before you go out looking to buy a lot of PayPal shares you might want to quickly look & see that PayPal is much like a goldfish in a small bowl .. If you move the fish to a bigger bowl or enviroment, it will only grow to the size of the bowl or area allowed by its size .. well picture that eBay is PayPal's bowl & it will only grow proportionately to the size of eBay .. as eBay sales diminish so will PayPal .. It got a great spur when eBay practically made PayPal the only accepted payment form on eBay a few months ago, But that boom has come to an end & now that eBay buyers & sellers become weary of the site because of blundering mis-management, PayPal's popularity will also fall .. I know the arguement is that PayPal is accepted many other places but first off you will not rub shoulders to even get introduced to paypal unless you become an eBay user first .. As Buyers & sellers become more angered at the site, They will not be as willing to reach for their paypal card before they reach for their local bank card first .. It is truly a chicken egg type scenerio .. or hand in hand ... Allan Kraig

Apr 29 02:28 PM

[eBay +++:]

Allan your wrong, Paypal off-eBay is over 50% of it's Revenue. Your argument is based on old data, you need to get updated...


On Apr 29 02:28 PM Allan kraig wrote:

> Before you go out looking to buy a lot of PayPal shares you might
> want to quickly look & see that PayPal is much like a goldfish
> in a small bowl .. If you move the fish to a bigger bowl or enviroment,
> it will only grow to the size of the bowl or area allowed by its
> size .. well picture that eBay is PayPal's bowl & it will only
> grow proportionately to the size of eBay .. as eBay sales diminish
> so will PayPal .. It got a great spur when eBay practically made
> PayPal the only accepted payment form on eBay a few months ago, But
> that boom has come to an end & now that eBay buyers & sellers
> become weary of the site because of blundering mis-management, PayPal's
> popularity will also fall .. I know the arguement is that PayPal
> is accepted many other places but first off you will not rub shoulders
> to even get introduced to paypal unless you become an eBay user first
> .. As Buyers & sellers become more angered at the site, They
> will not be as willing to reach for their paypal card before they
> reach for their local bank card first .. It is truly a chicken egg
> type scenerio .. or hand in hand ... Allan Kraig

Apr 29 03:21 PM

[Bob C:]

It was not a "smart move" on eBay's part to buy PayPal.
eBay HAD to buy PayPal, since it was kicking eBay's own payment system's @ss!

Even a blind hog finds an acorn now and then!

Watch for PayPals YOY numbers to level out, and then stay flat or even fall.

Apr 29 03:56 PM

[Philip Cohen:]

Where’s the logic in eBay relying on PayPal to prop up eBay’s bottom line when at the same time eBay’s management is slowly destroying eBay itself.

And, surely, the major credit card companies will eventually get off their butts and offer a similar card/terminal-less payments system to their partner-bank’s established internet-banking customer base—and do it better, as they have done with the credit/debit card system. When that happens the “clunky” PayPal will undoubtedly wither on the vine and have to rely on eBay’s mandating of the offering of PayPal on the eBay marketplace to survive; unfortunately, as implied by Quarles’ joking remark, if things keep going as they are, there probably won’t be much left of the eBay marketplace by then.

Apr 29 04:00 PM

[mrmillergd:]

The auction business at eBay is dead. They went after professional sellers but are getting their clock cleaned by Amazon and in-house ecommerce solutions. What consumer starts at eBay first when looking for something?

Apr 29 04:58 PM

[another.ana...:]

I agree that EBAY's brilliant management should change the companies ticker symbol----to SHITHEADS.

Ayuh

Apr 29 05:06 PM

[Shane Milburn:]

The paypal sidecar is the main reason I'm in the stock. Ease of use of Paypal on most online sites is far easier than Visa or MC. I find myself upset if an online site doesn't offer paypal as a payment method.

Apr 29 09:15 PM

[Patricia013:]

I agree - they should change the ticker to PYPL - without Paypal's success the mismanagement of Ebay's core would be painfully apparent! I still say Ebay can't hide behind Paypal much longer - as the quarterly reports go by the decline in core will be more and more evident. Will buying the stock just for Paypal be worthwhile even while it drags the declining Ebay behind it? I really don't know.

Apr 30 12:38 PM

[gordonk:]

I'm not too impressed with the investors inability to educate themselves about the true manipulations taking place at ebay under CEO, Donahoe's abrasive & destructive "leadership". I would've thought the shareholders would be motivated to actually investigate Donahoe's spin, rather than allow him to play them so. Of course Paypal's numbers went up when Donahoe's policies forced the vast majority of ebay members to pay only with Paypal, but ebay's core is the only place Donahoe has power to control. As he deliberately alienates ebayers, so too does he alienate persons from Paypal. Donahoe's tyrannical ebay changes have left a very bad taste in people's mouths for both ebay and Paypal. People are beginning to see Donahoe's ebay as the plague he has turned it into and will avoid both to protect their funds from arbitrary holds, corruption and manipulations.

Why pay to use Paypal, when many charge cards offer "one-time use" codes for each online purchase for FREE, anyway? Wake Up, shareholders!!!

Whitman & Donhoe's "Disruptive Innovation" of ebay is DESTROYING everything that was once good about ebay Inc. Ebay's ongoing practice of burying smaller sellers' paid listing, in favor of those corporate/Diamond Sellers free listings (with their meager 2% sell through rates), is just one of the policies created BY ebay management to INDUCE failure upon ebay's core and it's smaller sellers. Forced Paypal, one sided feedback, 180+ days withholding of users' funds, paper payment restrictions, reduced exposure, the placements of competitors ads on individuals' item description pages, kidnapped search results, ads taking potential buyers away from ebay's pages are just a few of the policies created BY ebay management to elicit the failure of ebay's core operations. Ebay's management is SOLELY RESPONSIBLE for creating those utensils of destruction. If Donahoe is left at ebay's helm to continue his depredation of ebay Inc., shareholders can continue to expect no dividends and further decimation of their holdings.

May 06 12:49 PM

[permacrisis:]

Transferring paypal is going to be a sticky piece of business if it ever becomes necessary, because of the way PayPal is set up.

In order to avoid most banking regulations, PayPal shares are a buck. Yeah that's right, a buck. And anyone who gives paypal money is a shareholder.

When you "send" money you are buying and selling shares of PayPal. (Corollary...So the majority owner of PayPal may well be Jack Ma or Bargainland!) This makes the prospect of selling PayPal in the usual way nearly impossible. They would need to use a shell company which, as you read this, Obama is getting ready to outlaw.

It would appear that Donahoes dream is about to be smashed!!!

May 16 05:25 PM