Elliot Management, a New York investment firm known for its activist streak, has urged eBay to sell StubHub in order to improve its stock.
The brokers have taken multimillion-dollar stakes in eBay and have now demanded in a letter to management that it breaks apart and rethinks its management team.
It outlined a five-step plan to improve eBay’s “floundering” stock, including separating StubHub and its classified properties to focus on its core marketplace.
Elliot Management thinks that the company stock, which was at $33.71 yesterday morning, could be worth between $55 (£42/€48) and $63 per share if it follows the advice.
The letter states: “Over the past five years, eBay’s total return has been more than 100 per cent lower than peers and ~35 per cent to ~65 per cent lower than the technology indices. Moreover, eBay has declined 20 per cent over the past year alone relative to a roughly flat equity market,” Elliott wrote in the letter.
It went on, “Most disappointing, however, is that this significant underperformance has occurred despite strong end-market performance. As the broader internet universe has flourished, especially e-commerce peers, eBay’s stock has floundered.
It added: “eBay’s Marketplace is a strategically valuable asset that has weathered prolonged, self-inflicted misexecution. Management should turn its singular attention to growing and strengthening Marketplace,” Elliott wrote in the letter.
“Today eBay suffers from an inefficient organisational structure, wasteful spend and a misallocation of resources.”
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