Answer: $40 billion to $45 billion (or two-thirds of what the current eBay/PayPal entity is worth today.)
Question: What do analysts predict a newly independent PYPL’s valuation to be once the pricing of its shares are released today? (Today, Monday, July 6, 2015, is the day it’s said we’ll know, according to a Financial Times report published Sunday, July 5.)
That tidbit was just one of the topics of conversation as FT sat down with PayPal CEO Dan Schulman two weeks before PayPal’s official split from eBay. The other topics of conversation: What lies ahead and how concerned Schulman is about competition from the various “Pay” players in the market, namely, Apple, Google and Samsung.
On that particular point, Schulman was sanguine.
“PayPal has always had competition,” Schulman told FT. “When you have an extremely large market, growing at a nice clip, that always invites competition.”
An environment and a time in financial services that Schulman told the interviewer he finds “exciting.”
Since PayPal entered the market 17 years ago, payments has always been ripe with intense competition and evolving technologies, specifically the boom in mobile commerce. Until recently, few efforts were made by anyone, outside of Amazon, to invest in overcoming the friction associated with checking out online. Only since the advent of smartphones and the access to the Internet that it delivers, along with the frustration of typing in payment information on a tiny screen, did the environment for online — and mobile — commerce ramp up.
A situation that Schulman told FT doesn’t really worry him.
According to Schulman, PayPal’s brand and network of both consumers and merchants leaves no room for concern.
When it comes to expanding to PayPal’s consumer base beyond its 155 million active customer accounts, Schulman points to the fact that the ways in which people manage their money are set to change.
“It is expensive to be poor,” he said. “Technology should make managing and moving your money a right, not a privilege.”
Bringing financial services to an even broader audience feeds into Schulman’s belief that PayPal stands as a true example of a “technology-enabled financial services platform with global scale.”
That will continue to expand as Schulman and the PayPal team use the $6 billion in net cash — its eBay dowry, if you will — to expand its business and services.
“We’ll use that balance sheet to look at potential acquisitions,” Schulman said. Just last week PayPal announced the acquisition of international money transfer provider, Xoom, for $890 million in an all cash deal.
Xoom’s “anytime, anywhere” money transfer platform enables U.S. consumers to send money to friends and family in 37 different “receive” countries and pay bills via mobile phones, tablets and computers. Xoom’s proprietary “funds-out” network will allow PayPal to build out a key part of its consumer value proposition — digital money transfer and management.
As PayPal prepares to go public for the second time, the first being back in 2002 before it was purchased by eBay months later, Schulman said doing good for both shareholders and consumers is attainable.
“Those two are not in conflict whatsoever,” he said, explaining the possibility for PayPal to create innovative uses for technology that satisfy consumer needs and Wall Street’s expectations.
For the global payments network, which processes more than $600 million in payments daily and brought in $8 billion in revenue last year, the next step is tapping its addressable market, which Schulman defines not as today’s global online commerce but all of the commerce in the world.