eBay stock rises after Elliott Investments buys $1.4 billion stake
eBay shares are up after Elliot Investments proposes changes for the e-commerce site.
eBay stock is up after hedge fund Elliot investment bought a 4% stake in the company. In a letter to its board of directors, Elliott insisted that the online auction site should sell some of its business interests.
Why is eBay stock up?
eBay shares have risen after Elliott announced that it would invest in the e-commerce website. Elliott is headed by billionaire activist investor, Paul Singer. Elliott has already made sweeping suggestions for the company to improve its profits after they fell by 13% in 2018. Investors must feel confident that Elliott’s plans for eBay will turn the company around.
‘Despite its remarkable history as one of the world's largest e-commerce platforms, eBay as a public-company investment has underperformed both its peers and the market for a prolonged period of time,’ wrote Elliott.
Will eBay keep StubHub?
Elliott suggested that eBay should sell its interest in StubHub, the ticket resale website. The hedge fund noted that the online ticket site is valued at $3.5 billion, as opposed to eBay’s more profitable classifieds section. The classified group is worth from $8 to $12 billion. In its letter, Elliott noted that eBay’s marketplace business is ‘deeply undervalued,’ and the firm suggested selling off those divisions.
DA Davidson analyst, Tom Forte, is skeptical that the online auction site can revive its profits through selling StubHub and focusing on ads.
'I understand the logic of what the shareholders propose, though I am more optimistic than they appear to be about eBay’s ability to reignite growth on core eBay via advertising and payments,’ said Forte.
Though Elliott thinks eBay has been mismanaged, the letter expressed optimism that eBay can increase its profits again.
‘Elliott believes that eBay is worth far more. But change is urgently needed to address both public perceptions and real business issues. While we believe that execution missteps and unclear focus have impaired value, eBay is far from broken, and its future should be bright,’ noted the firm.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.