Sunday 4 December 2016

PayPal valued at $50bn on its market return

Devika Krishna Kumar and Mari Saito

Published 21/07/2015 | 02:30

Staff members work in the Paypal Inc. booth at the 16th e-Book Expo Tokyo in Tokyo, Japan, on Thursday, July 5, 2012. The world largest trade show for e-book devices, contents and technologies is held through July 6. Photographer: Tomohiro Ohsumi/Bloomberg
Staff members work in the Paypal Inc. booth at the 16th e-Book Expo Tokyo in Tokyo, Japan, on Thursday, July 5, 2012. The world largest trade show for e-book devices, contents and technologies is held through July 6. Photographer: Tomohiro Ohsumi/Bloomberg

PayPal shares rose 5.9pc in pre-market trading, ahead of their highly anticipated return to the Nasdaq, valuing the company at about $50bn (€46bn).

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PayPal, which is being spun off from eBay, is widely expected to build partnerships with e-commerce rivals and try to seize market share from startups such as Stripe - an emerging US player founded by the Irish Collison brothers - and Square plus technology behemoth Apple, which unveiled its own mobile payments service last year.

PayPal shares traded at $40.62, up from Friday's close of $38.35 when the shares were trading on a "when issued" basis. "PayPal is the gorilla among independent digital payment service providers with more than 160mn active accounts, global scale and brand recognition," JP Morgan analysts said.

PayPal is also looking to compete with Western Union and other money transfer companies. Chief executive Dan Schulman said he was looking to use Paypal's size to offer affordable financial services widely.

PayPal was founded in the late 1990s by venture capitalist Peter Thiel, Tesla Motors boss Elon Musk and others. It went public in 2002 and was acquired by eBay soon after for $1.5bn.

EBay has split PayPal back off again, saying this would give both companies more focus and flexibility. Based on eBay common stock outstanding as of June 1, about 1.22bn shares of PayPal common stock would have been distributed to eBay shareholders.

"We believe PayPal represents the most direct way to play growth in online and mobile payments, which we expect will grow several hundred basis points faster than the industry as online takes share," BMO capital Markets analysts said.

They said they expected investors to value PayPal relative to Visa and MasterCard, but added that PayPal had a relatively low EBITDA margin profile of 27pc versus 60-70pc for the two credit card giants. (Bloomberg)

Irish Independent

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