EBay Or PayPal: Which One To Invest In After The Spinoff?

eBay Inc (NASDAQ: EBAY) reported better than expected first quarter earnings on Wednesday. Now that the eBay-PayPal spinoff is going to be reality, the question investors are asking is: which one to bet on?

Gil Luria, managing director Research of Wedbush Securities, was on CNBC to answer that question.

Two Different Roads

“There will be two completely different companies, which was really the goal of the spin-off,” Luria said. “PayPal is going to be a great growth company, growing 15-20 percent revenue, very exciting prospects, very long ramp ahead, investing in new technology. And the eBay marketplace business is going to be a good share to own for value investors.”

Related Link: EBay Now Worth $60/Shares, Wedbush Says

“It’s going to be returning cash to shareholders. It’s going to likely start a dividend and so even though it is going to grow much slower, there is a shareholder base that would like that. Up until now, eBay has been an inbetween company.”

He continued, “They weren’t going quite fast enough and not returning enough cash to shareholders; by splitting these two, shares that are very appropriate for the growth investors and value investors and that’s a big reason why they are doing this spin.”

The Better Bet

Luria was asked if he would be investing in both the shares post the eBay-PayPal spin-off or would he be looking at one over or the other. He replied, “Right now, we have a Neutral rating and a lot of it has to do with that question of what the shares start off at once there is a spin; if PayPal comes out at $35 or below, that’s probably the more interesting half. If Marketplace comes out at $25 or below, that’s probably the more interesting half.”