Morningstar On eBay: It Comes Down To PayPal And Marketplace

E-commerce giant eBay Inc (NASDAQ: EBAY) is scheduled to post its fourth-quarter results after Wednesday's closing bell. R.J. Hottovy, global director and senior analyst at Morningstar, was on CNBC to talk about what investors should expect from eBay's results.

What Are Your Expectations From The Results?

"Really, it comes down to two things," Hottovy said. "One, taking look at the PayPal business, looking to see if they sustained the growth they saw throughout much of 2014, both on the user growth, but also total payments volume. Margins, I think, are also going to be critical here. They did see a little bit of contraction on that end, part of it having to do with the fact that they integrated Brain Tree into the business now, but I think that's the first thing to look at."

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He continued, "Even more importantly is the Marketplaces business where you have seen some pressure following the May 2014 Google's algorithm change, as well as the data breach. That business has been pressured in terms of gross merchandise volume since that incident fell from double-digit growth to high single-digit growth in the third-quarter."

Expectations From Split Up Of PayPal Unit?

"I think that'll be interesting," Hottovy said. "I think the plan right now is to put out the registration statements and filing statements for a separate PayPal sometime after the 10-K filings, sometime in the first half of the year and then still I believe it's not planned for a spinoff in the second half of the year. There is a risk it could be a potential acquisition candidate from someone like a Google or an Alibaba, that makes a lot of strategic sense."