PayPal’s Shares Rise as it Flies Solo (July 20, 2015)
On PayPal’s first day as an independent, publicly traded company, its stock rose more than 5 percent above its opening price per share, putting the company at a valuation of about $50 billion, as its growth continues to outpace its former parent, eBay. PayPal now will become an even more potent force in the red-hot payments M&A arena, where startups quickly may become prey or partners. “PayPal, now as a public company, has to prove it can grow and prosper,” notes David Shine, a partner who heads the M&A practice at international law firm Paul Hastings LLP. PayPal is sure to have “a large appetite” for acquisitions, he predicts.
With its current momentum, PayPal is in a position to accelerate growth for other startups it adds to its expanding arsenal of payments technology innovators, Shine suggests. A look at PayPal’s recent numbers also underscores how artfully the company has used previous acquisitions—such as its 2013 purchase of Braintree—to throw fuel on its own fire. During the second quarter ended June 30, PayPal’s total payment volume grew 28 percent, to $66 billion. Revenue reached $2.3 billion, up 19 percent, and during the quarter PayPal processed 1.1 billion transactions, up 27 percent over the same period last year. PayPal also added 3.5 million new customer accounts during Q2—up 11 percent—to reach 169 million active accounts. PayPal continues to grow at double the rate of e-commerce, Dan Schulman, PayPal’s president and CEO, wrote in a blog post last week.
Growth in the P2P payments and money transfer arena also is a top priority for PayPal. In the same blog post, Schulman signaled he sees major opportunities for growth and innovation surrounding the international remittance industry, in which PayPal is already a key player. PayPal this month announced plans to acquire Xoom Corp., which has a strong brand in remittances in 38 countries. The $890 million purchase of Xoom marks “an important step forward” in the company’s strategic vision to grow by expansion, reaching consumers in new markets, Schulman suggested.
eBay acquired PayPal 13 years ago for $1.3 billion and in 2014, PayPal generated nearly half of eBay’s total revenue. eBay’s total revenue during 2014 shrank 3 percent to $21 billion. PayPal trades now on NASDAQ under the ticker symbol, PYPL, the same symbol it used before eBay acquired it.
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