eBay (NASDAQ:EBAY) Is A Good Buy Due to Split Plans

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By Jacob Maslow

eBay App on iPad Air
Kiev, Ukraine – May 21, 2014: Woman holding a white Apple iPad Air with eBay welcome message on a screen. eBay is the worldwide online auction and shopping website that founded in September 3, 1995.

The online auction market place and payment processing giant eBay (NASDAQ:EBAY) is a great stock to buy. It is restructuring. It has been laying off people and lowering costs. That isn’t the reason why I think it is a good stock to buy. The reason why I am bullish on this stock is the fact that it is splitting up into two companies. It is going to be spinning off its PayPal unit from its traditional auction business. Once the company has split into two, it would make for a very lucrative mergers and acquisition target.

PayPal is a household name. It also generates a tremendous amount of revenue. It would make for a great buy for a large global credit processing company like MasterCard or Visa to acquire PayPal.

A more remote possibility would be for PayPal to add additional revenue-generating heft to a beleaguered stock like Google. Let’s face it. Google has been kind of the unwanted stepchild of the technology trading space. A lot of technology traders have been avoiding Google in favor of faster appreciating assets like Facebook and Apple. Google is looking to regain a lot of its lost sex appeal, and an acquisition of PayPal makes a lot of sense.

As far as the trading platform is concerned, there is no shortage of takers on that front either. There are lots of e-commerce giants that would love to sink their teeth on eBay. eBay is a powerful online brand and it has a huge traffic base. What would be better than for an e-commerce platform that already has a lot of traffic to merge that traffic base with eBay’s substantial traffic base? Sure, there would be a lot of redundancies. But the larger combined traffic base can produce a self-sustaining ecosystem that can generate quite a bit of revenue down the road.

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