What will eBay do with all the money?
There’s no doubt in any one’s mind that PayPal is doing well. That’s why investors are happy at the prospect of seeing PayPal floated off as a separate company free to plough it’s own furrow in the payments industry unencumbered by eBay.
What’s not really been talked about however is the amount that eBay has invested in PayPal over the years. Putting aside the symbiotic growth which came about as every eBay buyer and seller were forced to open a PayPal account and offer it (actually pretty much forced to use it) for all eBay transactions, eBay has also spent vast sums of money acquiring businesses to help grow PayPal. Here’s just a few of the notable acquisitions:
eBay Acquisitions to grow PayPal
|Bill Me Later||2008||$1,200,000,000|
Total Expenditure $2,544,000,000
So it would appear that over the past five years eBay has spent well over two and a half billion dollars to grow PayPal to where it is today. That won’t be happening in the future – once PayPal is floated off mid 2015 as a separate company they’ll have to source their own acquisition and growth funds from investors, instead of dipping into the almost bottomless pit of eBay’s coffers.
The big question, assuming eBay carries on generating vast sums of money is what will they spend the next $2.5 billion on. Whatever the cash is spent on, instead of propping up payments, it’ll be invested in growing the marketplace business.
What would you like to see from eBay’s future investment in eBay?