Mobile Commerce

PayPal’s Market Cap Blasts Past Amex

It’s been a strong year for PayPal, which has seen its shares up 75 percent since the beginning of the year.

And, as of last week, PayPal had carved itself out a new distinction — a market cap that has bounced over American Express.

PayPal’s market capitalization hit at about $83 billion, nearly double the $47 billion value it had when it spun off from eBay Inc. a little over two years ago. And as Amex is in the rear window, some other big name Wall Street firms are at risk of being demoted — at $83 billion, PayPal is $6 billion away from passing Morgan Stanley and within $10 billion of Goldman Sachs’ valuation.

On Wednesday, analysts at Morgan Stanley upgraded PayPal’s stock, noting that PayPal “is among the few large companies that can deliver high-teens revenue [growth] … with significant upside opportunities.”

But Craig Maurer, an analyst at Autonomous Research, warned that PayPal’s shareholders aren’t pricing in much room for error if the company doesn’t deliver on its projections.

“When I talk to bulls, they’re in the nothing-can-go-wrong camp because it’s the only way to justify the valuation,” Mr. Maurer said.

PayPal’s earnings will be out for all to see on Thursday — as of now, it trades at a multiple of around 32 times forward earnings. By comparison, Visa trades at around 27 times forward earnings and Mastercard is around 29 times. AmEx, meanwhile, trades just shy of 15 times.

But PayPal has also expanded its purview during the Schulman era, transitioning from being a simple payments company into attempting to build the operating system for global digital commerce.

“It’s grown into much more of a technology platform play,” said Lori Keith, a portfolio manager and research analyst at Parnassus Investments, which owns PayPal shares. “They were trying to be the disrupter in the space, but now they are very much focused on partnering.”

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PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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