eBay stock (NASDAQ:EBAY) is up more than 6% on Tuesday as the company received an urgent plea from an activist investor regarding some moves the online marketplace could make to increase its market value greatly.
Elliott Management is an investment firm that wrote a letter to the purchases and sales site, urging it to go through a restructuring that would require selling some of its business units. The firm believes that enacting such a move will double the online marketplace’s market value over the next two years.
The firm said that eBay “suffers from a deeply depressed valuation due to its history of misexecution.” While eBay stock is only selling at $33 per share (even after rising today), the firm said in its letter to the board of directors that it could see the online marketplace having a value of roughly $55 to $63 per share in 2020.
The hedge fund has a stake of more than 4% in eBay. “Elliott believes that eBay is worth far more,” it said. “But change is urgently needed to address both public perceptions and real business issues.” It said eBay “has consistently underperformed its potential.”
“Despite its remarkable history as one of the world’s largest e-commerce platforms, eBay as a public-company investment has underperformed both its peers and the market for a prolonged period of time,” Elliott wrote.
EBAY stock is up more than 6.5% on Tuesday.
