clock menu more-arrow no yes

Filed under:

eBay is about to lose its growth engine PayPal

New, 15 comments

The upcoming PayPal spinoff could hurt eBay's bottom line going forward

eBay and PayPal are getting ready to split apart into two separate companies — and it may hurt eBay's bottom line. The company just announced its Q1 2015 earnings, and while the overall business was healthy (net revenue was up 4 percent year over year), there are signs that the spinoff of PayPal later this year might be painful.

PayPal today is one of the strongest parts of eBay. eBay Payments' revenue, of which PayPal is the key component, grew 14 percent year over year, by far the healthiest of eBay's three current business divisions. But revenue from eBay Marketplaces, the traditional eBay storefront we've all come to know and tolerate over the last few decades, declined 4 percent year over year. That's a relatively small decline — but, as noted by Mike Isaac at The New York Times, it's also the first time that Marketplaces revenue declined since Q3 of 2009.

It's not a trend that eBay expects to change any time soon, either — revenue from Marketplaces is expected to grow between 0 and 5 percent in the coming year. Meanwhile, PayPal revenues are expected to rise 15 to 18 percent in 2015. It's not a great trend for a company that won't have PayPal to prop it up anymore before very long.