PayPal Holdings Inc (NASDAQ:PYPL) was the firm that launched the Silicon Valley legends Elon Musk and Peter Theil.
There were others who also made out quite well and have wielded influence in “the Valley” since then, but that duo have become poster children for what a few billion can do for young, ambitious technocrats.
For years, PYPL was bound to online auction site and retailer eBay Inc (NASDAQ:EBAY). But in July 2015 that all changed.
Some activist investors had been pressuring eBay to unwind PYPL and let it stand on its own. They saw EBAY as a relatively steady grower but PayPal was the potentially sexy hot commodity that could have huge potential if EBAY would just get out of the way.
EBAY still owns a good chunk of PYPL and has guaranteed a reliable source of revenue, if necessary until 2020.
But at this point, PYPL is well out of the nest and flying on its own. It is now able to work as a payments vendor with any and all companies, rather than just being the sole property of eBay and anyone not in competition with the parent company.
For example, PYPL launched its own credit services that allowed users to buy on credit. That unit was just purchased in Q4 by credit card firm Synchrony Financial (NYSE:SYF) for $6.4 billion. The deal will take effect by Q3 2018.
Another big deal has been PYPL’s acquisition of peer to peer (P2P) payments firm Venmo happened way back in 2013, when PYPL bought Braintree for $800 million.
The roll out was certainly quiet and slow, some of that hamstrung by the fact that while still a part of eBay, a P2P network payment solution wasn’t a top priority. Also, the mobile revolution wasn’t in top gear yet.
But times have changed. Significantly.
P2P volume grew 50% for Q4 compared to the same quarter a year ago. And total payment volume was 20% of PYPL’s TPV for the quarter. Venmo volume was up 86% for the quarter, year over year, and 97% for the year. Venmo is now available with more than 2 million US merchants.
PYPL processed $48 billion in mobile payment volume in 2017, a 53% increase compared to 2016.
Last year, PYPL linked up with Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MC) and Venmo cut a deal for mobile payments with Facebook Inc (NASDAQ:FB). The only headline deal still eluding PYPL is Amazon.com, Inc. (NASDAQ:AMZN).
While that would be a huge deal, PYPL is doing well for itself all the same.
PYPL stock is up 80% in the past 12 months, but it’s off about 8% since releasing earnings. The company met expectations but guided a bit lighter for Q1 than analysts had hoped.
Their pessimism is your opportunity — buy the dip in this dynamic payments play.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
