After cratering throughout the last six months, eBay has recognized a significant spike in the past few days, bringing its value from around $30.50 to a high of over $34.
Analysts are reporting the 8% hike is due to new analysis from Elliott Management Corp. which reportedly sent a letter to eBay’s leadership team unveiling a plan for growth and high stock valuation in the future.
“Elliott suggested that eBay spin out its ‘market-leading’ StubHub and eBay Classifieds Group businesses so that they can be ‘run in a manner best aligned with their outlook and investment needs’ and so eBay executives can solely focus on improving its core marketplace business,” Emily Bary wrote today at Marketwatch.
Elliott’s communications revolve around a $1.4 billion stake in the company that represents nearly 5% of all shares.
This hedge fund is contending that eBay has suffered from mismanagement and has “good bones” in terms of setup for continued success.
What’s in the five-step plan? A press release put out today shows that Elliott recommends portfolio review, changes to the eBay marketplace and various operational improvements that will save on spending and trim the organizational structure.
The press release also cites “appropriate capital allocation,” which is rather vague on its own, but comes with a plea to return some capital to shareholders.
Stage five is “effective leadership and oversight” or the acquisition of talent and a willingness to go along with Elliott’s big plans.
Many traders looking into the crystal ball see Elliott as successfully directing the company – whether that’s toward growth and success remains to be seen, but having skin in the game really helps. Keep an eye on eBay as it bucks the trend today, and perhaps throughout the rest of the week as major index numbers, notably the S&P 500, have dropped while eBay continues to soar.