Well, well, well, we can’t say that we’re in any way surprised:
One of the world’s most successful investors, Carl Icahn, who has a stake in eBay, wants its management to spin off PayPal.
Our reaction is perhaps best summarised by THIS:
We can clearly see how this would add value for shareholders. PayPal is the jewel in eBay’s crown, and produces the bulk of the profits. Divesting the PayPal division would give shareholders a disproportionate return to current valuations. (Imagine the combined Ebay entity is currently worth $100 dollars. Selling Paypal may yield $80 and the lone eBay entity may still be worth $50 – a profit of $30 for shareholders. In other words, it’s currently worth less the sum of separate component parts. Classic asset stripping from one of the world’s greatest corporate raiders – Mr Icahn you’re a genius).
But we’re really unsure about the implications for eBay users – specifically eBay Sellers.
As we said in our blog post a few months ago, it is PayPal that lifted eBay from being nothing more than a glorified listings website. The payment platform company integrated with eBay’s listings and auction functionality to make the combined company an internet behemoth (VS say, Craigslist, a large enterprise for sure, but a relative minnow by comparison and, of course, a pure listings website). However, Paypal simultaneously RUINED eBay by continuously undermining eBay sellers, and siding with unscrupulous buyers. (see our previous blog posts for details, eg: this one).
Would divesting PayPal finally open up more DECENT payment companies and PayPal alternatives to facilitate transactions between buyers and sellers (by decent companies, we mean people like errr….….US!). This is the key question for the likes of us mortal people (as opposed to Mr Icahn) – would it finally allow sellers a more direct, cheap and, above all, RELIABLE way of getting paid?
The next question is, if that happened, would eBay become the wild-west once more for both Buyers and Sellers?
One of the most difficult things a Buyer or Seller has to overcome when embracing any new payment company is trust – or lack thereof. This has been the biggest hurdle to taking down that royal pain in the backside Paypal….
Build the trust (the very hardest thing), get the early adopters, gain the users and a payment company can supercharge ANY listings site and supplant PayPal, giving eBay another lease of life.
Delusions of grandeur? It doesn’t matter. Buyers and Sellers deserve better…