$EBAY Moves On $MELI News, Icahn Letters
EBay’s Latin tail is wagging the dog today.
Shares of the e-commerce and payments site are climbing after news that MercadoLibre, $MELI, beat EPS and sales expectations. $EBAY has an 18.4% stake in the Latin American e-commerce and payments company.
MercadoLibre reported $0.93 EPS on $134.60 Million in revenues. That trumped Wall Street consensus estimates of $0.78 on $133.23 Million in sales, according to the Analyst Ratings Network.
— Larry Darrell (@LarryDarrell5) Feb. 28 at 10:55 AM
It’s not unusual for eBay shares to move on news about its parts. Much of the recent gains in the stock have stemmed from speculation around the future of eBay’s payments arm PayPal, which is growing faster than eBay’s marketplace business.
On Feb. 24, activist shareholder Carl Icahn sent an open letter to eBay’s board again urging them to take PayPal public. In January, eBay announced that Icahn had acquired a 0.82% stake in the company and submitted a non-binding proposal to spinoff PayPal. The Board rejected the idea of turning PayPal into a separate company, arguing that eBay’s marketplace fuels PayPal’s growth and vice-versa.
Icahn sent another letter yesterday alleging conflicts of interests among members of eBay’s Board, namely venture capitalist Marc Andreesen and Intuit founder Scott Cook. He argues that Andreesen funds potential PayPal competitors and, as a board member, could use information about PayPal to enhance the position of these companies. Intuit offers a mobile payment processing solution similar to PayPal’s credit card reader.
The new allegations haven’t encouraged eBay to take another look at selling PayPal. “After diligent consideration we believe that eBay and PayPal are better together,” wrote eBay founder and Board Chairman Pierre Omidyar in a Feb. 27 letter. “In the future, if that is no longer true, we will act accordingly and in the best interests of shareholders and the company.”
Some cashtaggers applaud eBay for rejecting iCahn’s demands.
@BigD123 He already admitted he doesn't know much about tech. He's just greedy, because tech is hot. He could ruin Ebay. imo
— Duke Duke (@duke2duke) Feb. 28 at 10:24 AM
Other’s argue that Icahn is doing shareholders a service. They point out that Tesla CEO Elon Musk, who co-founded PayPal and sold it to eBay for $1.5 Billion in 2002, has argued PayPal should be a standalone company. Musk told Forbes that it doesn’t make sense for PayPal to still be part of an auction site.
$EBAY Paypal prolly worth more than ebay….ichan knows it!
— OptionBlaster (@OptionBlaster) Feb. 28 at 11:16 AM
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