EBay shares drop with news that PayPal president will step down
SAN JOSE, Calif. – EBay shares took a hit in intra-day trading yesterday, dropping 2% following the announcement that PayPal President David Marcus would be departing his post on June 27. Marcus is leaving eBay-owned PayPal to head up Facebook’s messaging products division.
So far, eBay has not named a replacement for Marcus. Until a successor is in place, PayPal’s leadership team will report to eBay Inc. President and CEO John Donahoe.
In support of eBay’s announcement of his impending departure, Marcus assured investors that PayPal is being left in good hands.
“…I know the business has a strong leadership team in place. That’s why now felt like the right time to make a change and return to how I most love to spend my time, leading smaller teams to build great product experiences,” Marcus said.
But of late, Wall Street hasn’t shown that it believes in eBay’s ability to guide PayPal into the future. Institutional investors haven’t gotten solidly behind eBay lagging shares since the first quarter of this year – even though the rest of the tech sector seems to have found its bottom and is recovering with minimal bruising.
According to TD Ameritrade, Credit Suisse is currently taking a “neutral” stance toward eBay stock, while MarketEdge analysts say to “avoid” it. ResearchTeam has downgraded it from a “hold” recommendation to “reduce.” Both TheStreet and Jaywalk Consensus have given eBay a “hold” rating, but Ford Equity Research says eBay is a “buy.”
In the past, both PayPal founder Elon Musk and hedge fund titan Carl Icahn have argued that PayPal should be spun off to operate independently of eBay. Although his stance has since softened, Icahn – majority shareholder of Icahn Enterprises, a major investor in eBay Inc. – spent months attacking Donahoe, labeling him as “incompetent.” On April 10, Icahn settled his proxy fight with eBay over the proposal to spin off PayPal when eBay agreed to Icahn’s suggested appointee to their Board of Directors: Centerview Capital Technology founding partner David Dorman.
EBay Inc. (NASDAQ:EBAY) is trading today between $48.14 and $48.74, down from its 52-week high of $59.70. The company has never paid a cash dividend, and according to its online Investor Relations page, “presently intends to continue this policy.” EBay’s second-quarter results are expected to be released on July 16.
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