On July 20, PayPal officially split off from eBay, making it an independent public company trading on the Nasdaq Stock Market (PYPL). Within hours, PayPal was valued at $49.5 billion – more than eBay, Netflix and Twitter, according to Business Insider and Statista. The company celebrated the move with the historic pushing of the PayPal button to ring the opening bell at Nasdaq last Monday.”As the world’s open, digital payments platform and most trusted and popular digital wallet, we are excited to celebrate our listing day and embark on our next chapter,” said Dan Schulman, President and Chief Executive Officer of PayPal, in a formal statement.
“Mobile technology is transforming payments, making it easier, safer and more affordable for people to move and manage their money than ever before. As an independent company, we see a tremendous opportunity for PayPal to expand our role as a champion for consumers and partner to merchants, and to help shape the industry as money becomes digital at an increasingly rapid pace,” Schulman said.PayPal was originally acquired by eBay in 2002 for $1.5 billion. Since then, PayPal has grown exponentially, now serving 169 million customers in 203 markets around the world. In 2014, PayPal processed $235 billion in total payments, generating more than $8 billion in revenue. Of the $235 billion, $46 billion payments were mobile payments.This split from eBay was strategic, said eBay CEO John Donahoe in a statement last fall.”A thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively,” Donahoe said. “The industry landscape is changing, and each business faces different competitive opportunities and challenges.””We’d like to thank our friends at eBay for their tremendous support and partnership over the past 12-plus years,” Schulman said. “we are focused on leveraging our strengths to drive long-term growth for our company and shareholders. PayPal is unique. We have a singular focus on digital payments, deep commitment to customer service, a drive for innovation and a technology agnostic platform that creates value for our consumers and merchants online, in apps, and increasingly in stores.”PayPal’s growth is due, in part, to its acquisitions of Braintree, which acquired Venmo, and Xoom, helping the company expand its technology base and portfolio at the same time, said The Verge.Last Friday, PayPal announced another partnership, this time with TransferTo, a global airtime remittance company, said The Street. The partnership drove PayPal’s Friday stock price up by 1.05% to $37.40. The share price has dropped slightly since then, now at $36.64 as of 1:14 p.m. Eastern on July 27. eBay, by contrast, was worth $27.97 at the same time.Insider Take:The split from eBay was a huge boon for PayPal, dramatically increasing its value. Its impact on eBay, however, has not been as positive. In fact, last week Business Insider reported that Standard & Poor’s lowered its credit rating on eBay from ‘A’ to ‘BBB,’ citing its increased risk profile. Moody’s and Fitch also downgraded eBay. That didn’t stop eBay from acquiring Twice, a secondhand clothing startup, immediately after the split.How will this play out? PayPal will take advantage of this opportunity to focus on its core business, while acquiring companies that can help it leverage its strengths in digital and mobile payment processing. With the loss of PayPal in its portfolio, however, eBay will have to find other opportunities for growth – and fast. We’ll keep you updated as we hear of new developments.
