eBay to lose half its revenue by spinning off PayPal
After a 12-year relationship, eBay (EBAY) has decided to spin off payment processor, PayPal.
Almost half of eBay's revenue will disappear once PayPal becomes its own publicly traded company in the middle of 2015.
Hedge fund activist Carl Icahn has been fighting for this for about nine months, saying the separation will create value for investors. Icahn's stance is that separately both companies can focus purely on and highlight their own simplified businesses.
"I think this is the best news for PayPal. We're at the beginning of the revolution in mobile payments, a revolution in payments in general," said Dan Costa, editor-in-chief at PCMag.com
With Apple Pay, Google Wallet and other digital wallets popping up, PayPal needs to remain nimble and innovative. Currently, PayPal has 52 million active registered accounts and processes 9.3 million payments every day.
"They were an early actor, they were one of the leaders in the space, but I think with eBay's management they haven't been really able to focus on innovation, so hopefully they could open that up," Costa said.
Some analysts say by removing itself from eBay, PayPal could gain more business from rival e-commerce sites such as Amazon and Alibaba.
On the eBay side, Costa doesn't think consumers will notice too much of a change with payments, however, consumers may see PayPal on a lot of more people's phones.
