Mon, Jul. 20, 7:16 PM
- With PayPal (NASDAQ:PYPL) closing at $40.47 and EBAY (Marketplaces) at $28.57, PayPal and eBay rose a combined 4.1% today from pre-split eBay's Friday close of $66.29. PayPal is worth $49.4B, and eBay $34.7B.
- Helping PayPal: BMO, JPMorgan, Baird, SunTrust, and Wells Fargo launched coverage today with bullish ratings. Evercore went contrarian and launched at Sell.
- SunTrust's Bob Peck ($45 target) estimates PayPal's current B2C e-commerce addressable market is worth $45B+, and that its "stretch" addressable market (includes remittances, B2B e-commerce, and in-store payments - a lower share has to be assumed) could be worth ~$500B. "PayPal has 165M active users (including 10M merchants), operates in 200 countries with a support staff of 8,000, and is highly credible as it relates to international (48% of TPV), cross-border (24% of TPV), and global security and regulatory compliance ... PayPal has >$6B in cash ($2B U.S.) and capacity to raise ~$5B in debt (easily maintaining investment grade rating)."
- Baird's Colin Sebastian ($45 target): "PayPal is setting the global standard for online payments with trusted consumer brands and significant scale and reach. Now free from eBay, we believe PayPal can also accelerate newer initiatives beyond its core wheelhouse business (e-commerce)."
- Evercore's Ken Sena ($36 target), echoing past remarks, remains worried PayPal could lose share/see margin pressure on mobile, as payment platforms from tech giants that often have access to their users' card data (Apple, Google, Facebook, etc.) gain traction. Nonetheless, he admits Q2 payment volume ($66B, +20% Y/Y) was 3% better than expected, and that the Braintree/Venmo unit is giving a lift to mobile growth.
- Meanwhile, when asked in an interview about a potential deal with traditional eBay rival Amazon, PayPal CEO Dan Schulman left the door open to one. "We have the flexibility to work with any potential merchant partner across the globe ... I don’t really like to comment specifically [on potential partners.] We’ve had a wide array of discussions with various partners across the globe."
- Earlier: eBay/PayPal start trading post-split; PayPal worth nearly $50B
Mon, Jul. 20, 9:59 AM
- EBAY (Marketplaces) and PayPal (NASDAQ:PYPL) have officially begun trading as separately, publicly-traded, companies. As previously announced, eBay shareholders have been distributed one PayPal share for each eBay share owned.
- PayPal is at $40.51, and valued at $49.4B. eBay is at $27.73, and valued at $33.5B.
- Prior eBay/PayPal coverage
Thu, Jul. 16, 2:15 PM
- With expectations fairly low, EBAY has rallied to fresh highs after posting mixed Q2 results, announcing a $1B buyback hike, and offering soft full-year guidance ahead of a pending PayPal (Pending:PYPL) split. The company expects Marketplaces and PayPal to have 2015 EPS of $2.95-$3.04 between them ($1.72-$1.77 for Marketplaces, $1.23-$1.27 for PayPal), below a $3.12 consensus.
- Also: Confirming an overnight WSJ report, eBay has announced it's selling its Enterprise unit (formerly GSI Commerce) to a consortium featuring P-E firms Permira and Sterling Partners for $925M in cash. The deal is expected to close in 2H15. eBay bought GSI Commerce for $2.4B in 2011.
- PayPal metrics remained strong in Q2: Payment volume rose 20% Y/Y (+28% exc. forex) to $65.9B, with a 27% increase in merchant services volume offsetting a 1% drop in eBay-related volume. Many expect the eBay's breakup to open up more opportunities for PayPal to strike deals with eBay rivals.
- Marketplaces, hurt by Google algorithm changes and tough competition from Amazon, saw GMV fall 2% Y/Y (+6% exc. forex) to $20.1B. U.S. GMV rose 2%, and international GMV fell 5%.
- Prior eBay coverage, earnings release,
Thu, Jul. 16, 8:04 AM
- eBay (NASDAQ:EBAY) reports payments revenue rose 16% to $2.26B in Q2. PayPal new active accounts increased 11% to 169M with 1.1B transactions processed.
- Marketplaces revenue fell 3% to $2.116B as F/X played a factor. Marketplaces active buyers were up 6% during the quarter.
- Total operating expenses +10.7% to $2.29B.
- A new $1B share buyback program is announced.
- Guidance: Full-year revenue growh of 3% to 5% (ex-F/X) expected. EPS of $1.72-$1.77 seen.
- Previously: eBay beats by $0.03, misses on revenue (July 16)
- Previously: WSJ: eBay nears enterprise unit sale (July 16)
- EBAY +1.43% premarket.
Thu, Jul. 16, 7:42 AM
Thu, Jul. 2, 5:45 PM
- EBAY closed up 2.4% following news PayPal (Pending:PYPL) is buying top online international money transfer service XOOM for $890M. With PayPal now just 18 days away from trading separately, eBay is within $1.50 of a 52-week high of $63.30. Western Union had a less favorable reaction to the deal.
- Street reactions to the purchase have been largely positive. SunTrust's Bob Peck: "We see synergies/opportunity between Xoom and [mobile payments platform] Venmo inside the PayPal ecosystem enabling lower cost (ACH, or debit worse-case) wallet funding (PayPal, Paydiant) and in-market and cross-border [consumer-to-consumer] and [consumer-to-business] transactions. This could serve to sustain relevance on the consumer side and (interrelated) preserve/lower funding cost and strengthen the value proposition on the merchant side."
- Baird's Colin Sebastian: "Both PayPal and Xoom have competitive advantages from fraud-detection technology underlying their respective products. While Xoom’s engine was initially built using concepts borrowed from PayPal, they have since extended the functionality to peer-to-peer international remittance..."
- Keefe, Bruyette & Woods' Sanjay Sakhrani: "[I]nternational money transmittance is a highly adjacent business to P2P payments and digital wallets, which is PayPal's core business…Despite a fairly rich valuation, XOOM is growing quickly and brings to the table a scalable, bolt-on platform to help offer additional value-add..." Morgan Stanley's Brian Nowak sees an opportunity to significantly expand Xoom's op. margin (4% in 2014).
- Xoom closed at $25.05, slightly above PayPal's $25/share buyout price. SunTrust's Andrew Jeffrey thinks Western Union and/or Internet companies could make a rival bid. Baird's Sebastian: "Higher bid from traditional money transfer company still plausible given a PayPal-Xoom combination presents a much greater (and better-capitalized) competitive threat."
Wed, Jul. 1, 6:06 PM
Wed, Jul. 1, 5:40 PM
- PayPal (EBAY, PYPL) is acquiring leading online money transfer/remittance service provider XOOM for an enterprise value of $890M, or $25/share, in cash.
- The price represents a 21% premium to Xoom's Wednesday close. The deal comes ahead of PayPal's mid-July spinoff into a separate, publicly-traded, company. XOOM has been halted.
- PayPal president/soon-to-be-CEO Dan Schulman: "Expanding into international money transfer and remittances aligns with our strategic vision to democratize the movement and management of money ... Xoom's presence in 37 countries in particular, Mexico, India, the Philippines, China and Brazil will help us accelerate our expansion in these important markets."
- The deal is expected to close in Q4, and be slightly dilutive to PayPal's 2016 EPS. PayPal plans to pay for it with existing cash. Xoom will operate as a separate service within PayPal.
- Recent PayPal acquisitions include white-label mobile payments services provider Paydiant, cybersecurity software firm CyActive, and rival online/mobile payments service provider Braintree.
Mon, Jun. 8, 11:14 AM
- eBay (EBAY -2.5%) forecasts its Marketplaces ops will see just 0%-5% constant currency revenue growth in both 2015 and 2016. PayPal is expected to see 15%-18% constant currency growth in 2015, and ~15% annual growth in the "medium term."
- Marketplaces guidance: Marketplaces' EPS growth is expected to exceed revenue growth in 2016 and later (no 2015 forecast is given). eBay sees the business posting free cash flow of $2.1B-$2.3B in 2015, and $2.3B-$2.5B in 2016. Op. margin is expected to be roughly flat long-term relative to 2015 and 2016 target ranges of 32%-34% and 31%-35%.
- PayPal guidance: PayPal is expected to see 2015 free cash flow of $1.6B-$1.8B, and FCF growing in-line with revenue in the medium term. Forex-adjusted payment volume growth is expected to be in the mid-20s in both 2015 and the medium term. Op. margin is forecast to be at 20%-21% in 2015, and be "stable to growing" in the medium term.
- Piper's Gene Munster (Underweight rating) observes the Marketplaces guidance is below Street forecasts. and the PayPal guidance in-line. The PayPal spinoff remains set to occur in 2H15.
- For reference, eBay's Marketplaces revenue fell 4% Y/Y (in actual dollars) in Q1 to $2.07B, with GMV declining 2%. PayPal division revenue rose 14% to $2.11B, with payment volume rising 18%.
- Marketplaces slides. PayPal slides.
Wed, Apr. 22, 5:35 PM
Wed, Apr. 22, 4:37 PM
- eBay (NASDAQ:EBAY) reports total payment volume rose 18% to $61B in Q1.
- U.S. revenue up +8% Y/Y and -10% Q/Q (holiday).
- International revenue +2% Y/Y.
- Merchant services volume +26%.
- PayPal active accounts +11% to 165M. Active transactions +24% to top a billion.
- Higher engagement for PayPal was struck with transaction count and monetization per account both higher.
- Guidance: The company sees Q2 revenue of $4.4B-$4.5B vs. $4.67B consensus and EPS of $0.71-$0.73 vs. $0.71 consensus. Full-year revenue of $18.35B-$18.85B seen vs. $18.95 consensus.
- Previously: eBay beats by $0.07, beats on revenue
- EBAY +4.1% after hours.
Wed, Apr. 22, 4:17 PM
Wed, Mar. 18, 2:29 PM
- After dropping slightly yesterday following news Facebook (NASDAQ:FB) is giving Messenger users the ability to send money to each other (though not to merchants), EBAY is seeing steeper losses today. Volume (11M shares) has exceeded a 3-month daily average of 8.5M.
- Unlike PayPal, Facebook doesn't plan to charge transaction fees for the time being. Mark Zuckerberg has suggested he isn't interested in monetizing Messenger until it hits 1B users.
- Though P2P money transfers are a small portion of PayPal's transaction volume, Facebook's service could substantially grow the number of payment card numbers it has on file. The company is in the midst of testing (with the help of PayPal rival Stripe) a Buy button that lets users pay for advertised items without leaving Facebook's site/apps, using previously-saved card data.
- Buried within a Bloomberg column about Facebook's payments launch: Facebook says it now has 700M Messenger users. The company reported having 500M MAUs back in November.
Tue, Mar. 10, 12:51 PM
- ChannelAdvisor (ECOM -3.6%) clients saw their Amazon (AMZN -2.1%) same-store sales rise 22.7% Y/Y in February. That's down from January 27%, and also below the growth seen during 9 of the prior 10 months (December being the exception). Growth peaked at 45.1% in August.
- 38% of tracked Amazon sales relied on Amazon's fulfillment services (FBA), up from 32.2% a year earlier. 2.3% of sales relying on FBA involved non-Amazon transactions. Amazon stated in its Q4 report 3rd-party sellers using FBA grew 65% in 2014, and made up over 40% of Q4 3rd-party units.
- eBay (EBAY -2.5%) continues to lose share: Its ChannelAdvisor same-store sales grew 5.1% in February, down from January's 6.8% and below total U.S. e-commerce growth of 15% (per comScore) - auctions -26.2%, fixed-pride +8.6%, Motors +25.2%. eBay is coming off a Q4 in which its Marketplaces GMV only rose 2% Y/Y (3% U.S. growth, 1% international).
- Search ad-based same-store sales (largely involving Google ads) rose 10.7%, with rising clicks and orders offsetting declining ad prices. Google Shopping-related (NASDAQ:GOOG) same-store sales grew 20.7%.
- Amazon and eBay are both underperforming on a down day for equities. Amazon's volume has been below-average, and eBay's above-average.
Nov. 28, 2014, 12:27 PM
- IBM estimates U.S. Thanksgiving online sales rose 14% Y/Y, aided by a 29.8% increase in sales from department store sites. Mobile respectively accounted for 32.3% and 52.1% of sales and site traffic, up from 25.8% and 42.6% a year ago. Average order value fell by $7 to $125.
- ChannelAdvisor (ECOM -0.9%) reports its clients' Thanksgiving same-store sales rose 20.1%. Their Amazon (AMZN +1.7%) same-store sales rose 25.9%, but their eBay (EBAY +0.8%) sales fell 3%. Notably, all other marketplaces collectively saw 110% growth - retailers such as Best Buy and Sears have been adding marketplaces to complement their direct sales.
- For reference, ChannelAdvisor reported 32.4% and 4.4% Amazon and eBay October same-store growth, respectively. eBay has been losing marketplace share to Amazon for some time, and was hit this summer by Google algorithm changes and a security breach.
- Early reports for Black Friday sales have generally been positive.
Oct. 21, 2014, 2:42 PM
- "Third Point has met with management several times and is confident that Alibaba (BABA +3.8%) can generate long-term value in its core markets and compete in new ones, making it a compelling potential multi-year investment," writes Dan Loeb in his Q3 letter (.pdf).
- Loeb likes how the "substantial network effect" that exists for Alibaba's marketplaces both creates a strong moat and allows the company to obtain "an unrivaled amount of data on Chinese consumers."
- However, it's the "under-appreciated" value of Alibaba's other assets, such as its Alipay stake, the Aliyun cloud infrastructure platform, and the China Smart Logistics JV (48%-owned, handled 38% more packages than UPS in FY14) that intrigue him the most. At current levels, Loeb thinks he's effectively getting free call options on these businesses.
- Following a near-20% gain on his Sony (SNE -0.5%) investment, Loeb decided to bail out. Though approving of Sony's restructuring efforts, he thinks "more urgency will be necessary to definitively turn around the company’s fortunes."
- Loeb has confirmed reports Third Point took a major position in eBay (EBAY +3.3%) in Q3, and says "a meeting with CEO John Donahoe this summer left us impressed by his process-driven approach to optimizing the business."
- He argues the post-split eBay "will offer two appealing growth, relative value, and capital return profiles for investors," sees Marketplaces delivering high-single digits growth, and downplays Apple Pay-related concerns for PayPal on the grounds that Pay is primarily an offline payments solution.
- Like others, Loeb expects an independent PayPal to have more partnership options with tech/Internet giants. He thinks it's only being valued at 11.5x-14.5x 2015E EPS, a range deemed "too cheap for a company growing sales 20% with significant strategic optionality and a strong chance to shape the future of payments."
- Alibaba and eBay have moved higher following the release of Loeb's letter.
EBAY vs. ETF Alternatives
Other News & PR