I recall the annual report of eBay stock several years when the company still owned Paypal. I was struck by the fact that this not-so-little subsidiary was sitting inside the eBay corporate umbrella growing profits at a rate of 18% annually. Ebay.com was growing at a double-digit 13% rate, and was priced at a low valuation presumably because investors feared that Amazon would steal, rather than complement, eBay’s share of the online buy/sell market.
Then, in July 2015, eBay actually spun off PayPal at a price of $35 per share. Just four years later, the original eBay investors own eBay shares that have increased in value from $22 per share to $36 per share (not including dividends) and also own Paypal shares that have increased in value from $35 to $109 per share. One share of Paypal was issued for one share of Ebay per the terms of the spinoff, … Read the rest of this article!