WSJ Friday – Paypal Passes Amex in Market Cap
Paypal’s stock has been on an absolute tear this year up over 70% and pushing their market cap over $80B, with 55x P/E (compared to Visa’ 40x and Mastercard’s 36x)
eCommerce and payments are both hot sectors…. PayPal combines both. Most would tell you that the “real progress” for PayPal’s stock started July of last year with the V/MA peace treaties (blog).
Paypal’s biggest advantage is focus… they are 100% focused on payments. This gives them advantage in both innovation and execution, particularly when they are not dependent on getting the “permission” of anyone else. Venmo’s massive success is a great example of speed and finding a niche that no one else saw.
I tell Dan that I see 2 primary vectors for further growth: long tail (small retailers) and international (particularly small merchant acquiring). Wirecard sees the later as well given they just purchased Citi’s acquiring business in Asia.
Paypal’s competitive environment, the bundling of payments, and tech (new authentication/payment in OS ) creates a very challenging environment for growth. Their ability to focus and execute is what will differentiate them as a new tech standard is meaningless if no one uses it. Example is Apple Pay in store continues to be a flop.. where as apple pay in-app is a crushing success.
What most impresses me this week? Paypal’s partnerships (see Dan present on this topic – CNBC). Parnterships are a HUGE driver of volume (look at eBay’s impact). Consumers just want the easiest/default payment approach.
Congrats to Bill, Dan and team.. making this progress while REMAKING a technical infrastructure in a highly competitive environment is tough!
CORRECTION
In a post entitled “What to expect from Money in 2020” posted on October 5, 2017, I stated that Bank of America had “pulled out of their relationship with Cardlytics”. Cardlytics has informed me that this is false and that there is no change in the relationships with Bank of America or Citi. I
apologize and regret this error.
I look forward to getting another update on the CLO space from both banks this quarter. It sure is nice that someone reads page 3 of a blog on Money 2020 to notice this stuff. I’m always open to correcting errors or omissions.
