GEM Investment Club...•Exposure to Hacking and Online Identity Theft. •Prolonged...
Transcript of GEM Investment Club...•Exposure to Hacking and Online Identity Theft. •Prolonged...
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GEM Investment Club
Analysis of PayPal
By Mahaut & Guillaume
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The combination of the impressive latestresults of PayPal and its promising recentgrowth initiatives lead us to trust thefuture of the company.
In addition, we believe it is a decisivemoment to buy the PayPal stock : BUY
Investment summary
BUY – SELL – WAIT
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News
04
Table of Contents
Top Management
02Market
Analysis
03
Fundamental Analysis
05ChartAnalysis
06Consensus Analysis
07
Company’soverview
01
Risks & Opportunities
08
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Company’sOverview01
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What does the company do ?
PayPal Holdings, Inc. is an American company operating anonline payments system. The company operates as a paymentprocessor for online vendors, auction sites, and many othercommercial users, as well as at it offers a credit service to itsusers.
Ex-Confinity, the company was created in 1998 and stems froma merger with X.com, an online banking company founded byElon Musk.
PayPal had its Initial Public Offering (IPO) in 2002, leading to a$61 million valuation. Later that year, the company became awholly owned subsidiary of eBay, valued at $1.5 billion.
By 2010, PayPal had over 100 million active user accounts in190 markets through 25 different currencies.
In 2014, eBay spun off PayPal into a separate publicly tradedcompany which is now ranked 204th on the 2019 Fortune 500of the largest United States corporations by revenue.
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Where the company is doing business
N. America
S. America
Europe
Africa
Asia
Oceania
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Suppliers
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Strategy
Improve key partnerships
Grow its value proportions for customers
Improve its core operational capabilities
Look for new areas of growth
The company aims at improving its core operational capabilities.
PayPal focuses on growing its value proportion for customers byemphasizing on offering insight and risk management from its two-sidedpayments platforms
The company intends to grow through strategic collaboration byestablishing new partnerships to offer high quality experience to itscustomers, provide more choices, and obtain new customers.
PayPal seeks to expand its business through geographic expansion andstrategic business acquisitions.
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Strenghts Weaknesses Opportunities Threats
• Strategic acquisitions :various organic business expansion initiatives, notably in Asia-Pacific.
• Cryptocurrency : new service allows costumers to buy, hold and sell cryptocurrency directly from their account.
• Potential regulatory changes in the EU : GDPR.
• Exposure to Hacking andOnline Identity Theft.
• Prolonged low-interest-rate environment : challenge for the models of financial institutions.
• Business scale : provides PayPal with an edge over its many competitors.
• Financial performance : growth of the company operating margin which may increase investor confidence.
• Cost efficiency : the company reported a stressed cost efficiency ratio in 2020.
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Top Management02
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Board
President, CEO & Director
Daniel H. Shulman John D. Rainey Jr.John J. Donahoe II
CFO & Executive VP
Chairman of the Board
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Stockholders
8%7%
4%4%
4%
73%
% Ownership
The Vanguard Group, Inc.
BlackRock, Inc.
State Street Global Advisors,Inc.
FMR LLC
T. Rowe Price Group, Inc.
Others
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Market Analysis03
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Analysis of the market
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Analysis of the market
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Analysis of the market
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Analysis of the market
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Analysis of the market
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Analysis of the market
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Them
• Peer to peer network (Venmo)
• Provides e-merchants with tools to detect risky profiles (Venmo)
• Productivity gain (Adyen)
Us
• Better rate conversion from shopping basket to final purchase
• One third of employees are in charge of platform security and fraud detection
• Using 450 million gigabytes of data to reduce transaction declinex
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The eye of the experts
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News04
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News
Jan 6th, 2021Acquisition of Honey Science Corp.
for US$4 billion
Dec 31st, 2020PayPal becomes the first foreign company to
own 100% of a payment platform in China
Jan 11th, 2021$242 billion in Bitcoin assets are
traded on the PayPal platform
Jan 8th, 2021PayPal invests in TaxBit, a company
specialized in cryptocurrency fiscality
Dec 2020PayPal suffers from a rising number of
scams attempts against its users
Nov 14th, 2020PayPal adds cryptocurrency features
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Earnings
1st Quarter 3rd Quarter
2nd Quarter 4th Quarter
May 6th, 2020 Dec 17th, 2020
July 30th, 2020 Feb 3rd, 2021
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Fundamental Analysis05
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Income Statement
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Income Statement
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Balance Sheet
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Balance Sheet
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Cash Flow Statement
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Cash Flow Statement
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Ratios
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Ratios
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Enterprise valuation
EV/EBITDA
P/E ratio
38
48,6
92,1 101,2126,9
271
2016 2017 2018 2019 2020 2021
Market cap (in B)
68,3Paypal
31,9Visa
Global Payments 31,4 94,3 Paypal
Visa 41,3 48,7 Mastercard
EV/EBITDA
PayPal
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Chart Analysis06
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Chart analysis
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Chart analysis
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Chart analysis
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Chart analysis
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Consensus Analysis07
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Consensus analysis
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Risks & Opportunities08
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Opportunities
• Very impressive results for 2020, due partly to the Covid situation
• A very opportune time to buy the stock
• Ambitious and recent growth initiatives
Risks
• Exposure to Hacking and Online Identity Theft
• Potential regulatory changes in the EU
• Low-interest-rate environment
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Current Price Stop LossTake profit
$281 $213$230+22,6% -7,2%
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Let’s Discuss