PayPal Is Pulling Away From Its Former Parent

For the first time in a while, eBay made some positive headlines this week by posting results for the first quarter of 2019 that beat Wall Street expectations. The online marketplace reported $2.6 billion in revenue for the March quarter, earning 67 cents per share on an adjusted basis. The company is currently undergoing a difficult transition after it split from its former growth motor PayPal in 2015. The latter meanwhile continues to impress with its total payment volume growing to more than $160 billion in Q1 2019. eBay's former payment arm posted $4.1 billion in revenue for the quarter, up 12 percent compared to the first three months of 2018.

Prior to the official announcement of the split in September 2014, many people shared the impression that eBay was actually holding PayPal back, which ultimately resulted in the amicable divorce. At the time, PayPal was already growing faster than eBay’s core marketplace business and many people thought that it could do even better if its potential partners (i.e. third-party online retailers) would no longer have the feeling of feeding an enemy (eBay) when working with PayPal.

That turned out to be right. After the split, PayPal’s business continued to flourish while eBay struggled to keep pace with its former subsidiary. As of today, PayPal’s market capitalization ($128b) is nearly four times as high as eBay's ($33b) and we can expect that trend to continue going forward.