PayPal co-founder Elon Musk wants to see the company he sold to eBay Inc (NASDAQ:EBAY) go solo once again, because he thinks the auction site that owns it is holding it back from real growth. “It doesn’t make sense that a global payment system is a subsidiary of an auction website. It’s as if Target Corporation (NYSE:TGT) owned Visa Inc (NYSE:V) or something,” said Musk, reports Steven Bertoni for Forbes. “[PayPal] will get cut to pieces by Amazon Payments, or by others like Apple Inc. (NASDAQ:AAPL) and by startups if it continues to be part of eBay.”

PayPal

When Musk and the rest of the original PayPal team sold to eBay Inc (NASDAQ:EBAY), they were nowhere near as wealthy or successful as they are now. While they probably saw the potential for PayPal to become a powerhouse financial service, with mobile payments bringing the internet company into live transactions, it was still a relatively small company and the sale gave them the boost to pursue other projects (Musk, of course, is also behind Tesla).

PayPal is outgrowing its parent company

Since then, PayPal has outstripped eBay Inc (NASDAQ:EBAY) and has still has more growth potential. While a slim majority of PayPal transactions came from eBay in 2008, last year that was down to just 30%.

“It will either wither or be spun out,” says Musk. “Carl Icahn can see it, and he’s not exactly super tech savvy.”

PayPal is a jewel: Icahn

Icahn isn’t one to get worked up over the latest hot stock, but he clearly has a strong sense for value. “I don’t think eBay Inc (NASDAQ:EBAY) is a well-run company. When the tide is rising high, everyone looks good. Just compare eBay to Amazon.com, Inc. (NASDAQ:AMZN). PayPal is a jewel, and eBay is covering up its value,” said Icahn. “If you just went out and took it public you’d get a huge premium because of growth.”

Icahn owns about 2% of eBay, and he has a long history of fighting management over what he wants a company to do. Even if eBay Inc (NASDAQ:EBAY) hasn’t been talking about the possibility of a spin-off, the combination of a high profile article (PayPal president David Marcus will be on the cover of the next print issue of Forbes), and a push from the company founder and a very aggressive investor, they may have to start soon.