Ebay shares spike as Elliott reveals stake and demands Stubhub spin-off

Activist investor Elliott Management has revealed it has amassed a stake in Ebay worth roughly $1.4bn (£1.1bn), causing the retailer's share price to spike.

In an open letter, Elliott urged Ebay to spin off or sell its ticket-sales franchise Stubhub and its classified ads business. It said Ebay could more than double its market value if it restructured its business in the near future.

Shares in Ebay rose more than 11 per cent in pre-market trading, before settling above seven per cent. The e-commerce giant's stock had previously lost a quarter of its value in 2018 alone.

"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," wrote Jesse Cohn, a partner at the asset management firm.

"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."

Ebay did not immediately respond to a request for comment.

Elliott, which said it owns a four per cent stake in Ebay, argued that Stubhub could be worth as much as $4.5bn, while Ebay Classifieds Group could be worth up to $12bn. 

It also laid out a five-point plan for how Ebay could improve on its operating performance, which would include raising Ebay's costs by $250m between over the next three years.

Cohn added that the marketplace firm "suffers from an inefficient organizational structure, wasteful spend and a misallocation of resources".

Stubhub accounted for approximately 14 per cent of Ebay's total revenue in the third quarter of 2018, while its classfied ads business represented around 12 per cent. Its full-year results are due to be reported next week.