Elliott Management, an activist investor, has revealed that it has accumulated a stake in eBay that is worth approximately $1.4 billion (£1.1 billion). The said revelation caused the share price of the retailer to spike.
In an open letter, Elliott called on eBay to spin off or sell StubHub, its ticket-sales franchise, and its classified ads business. It said that eBay could more than double its market value if it opts to restructure its business in the near future.
The shares in eBay increased by more than 11 percent in pre-market trading, before settling at above seven percent. Previously, the stock of the e-commerce giant had lost a quarter of its value during the previous year alone.
In the said letter, a partner at the asset management company, Jesse Cohn, wrote: “The purpose of this letter is to share our perspectives as a large shareholder and provide our specific thoughts on how eBay can become a better and more valuable company.”
He added: “We are making this letter public today to draw attention to the uniquely compelling value opportunity at eBay. As a next step, we respectfully request a meeting with the board in the near term to discuss our thoughts and to listen to yours.”
The retailer did not immediately issue a response to a request for comment regarding the matter.
Elliott said it owns a four percent stake in eBay. It argued that StubHub could be worth as much as $4.5 billion, while eBay Classifieds Group could be worth up to $12 billion.
It also presented a five-point plan on how eBay could improve on its operating performance, which would include increasing the costs of eBay by $250m over the period of the next three years.
Cohn added that the marketplace company “suffers from an inefficient organizational structure, wasteful spend and a misallocation of resources.”
StubHub accounted for roughly 14 percent of the total revenue of eBay in the third quarter of last year, while its classified ads business represented approximately 12 percent. Its full-year results are scheduled to be reported next week.