The highly anticipated split between two companies that seemed forever conjoined happened earlier this week, Paypal and eBay went their separate ways. EBay, who announced the divorce late last year hopes to extend and revitalize their business after leaving Paypal, who was responsible for a whopping 43 percent of all eBay’s Revenue last year. In the last week of the companies being a single entity Paypal was just about half of all eBay’s total reported revenues. It’s this split that emphasizes Paypal’s true value as a worldwide online payment system, previously concealed by online shopping giant, eBay.
The company that was purchased by eBay in 2002 for $1.5 billion is now worth 33 times more since its last IPO. This comes at no surprise considering Paypal has handled over $1 trillion with help from its 169 million users.
This weeks’ break is great news for the company, more freedom and the ability to acquire other companies is now what Paypal has its site on. The financial giant is ready to report quarterly earnings again and gain shareholders by the truckloads. With only small local companies such as Alipay and Stripe to compete with, investor’s palms have been itching at an opportunity to jump on board.
However, the enormously monumental change in Paypal’s future hasn’t come without discord. John Donahoe, eBay’s CEO who opposed the split announced that he is to withdraw from the company following the spinoff. As part of eBay’s restructuring towards a more configured company it has said it would cut 2400 positions, which would deplete its global workforce by nearly 7 percent.
Luckily for Paypal, 74 percent of the largest U.S. online retailer’s sites, and nearly 70 percent of those across Europe, the Middle East and Africa already use the company. With Paypal now running on 67% of top mobile apps it is clear that PayPal has a significant lead in getting their button to appear on lots of merchant checkout pages across the Web.
The future for both companies is not guaranteed but most seem to be that Paypal will be better off in the long run while eBay struggles to find a distinctive strategy that will drive revenues and profit, which isn’t hard to imagine in such an increasingly growing and competitive space.
