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PayPal to Trade Independently after eBay’s 2Q15 Earnings Release

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Growth prospects for stand-alone companies eBay and Paypal

eBay’s (EBAY) spin-off PayPal will begin trading separately following the release of eBay’s earnings on July 16. The stock market is expected to list Paypal as an independent, separate entity that will trade on NASDAQ with the ticker PYPL on July 20.

Analysts expect the newly formed PayPal to project adjusted EPS (earnings per share) of $1.60 and revenue of $10.7 billion for fiscal 2016. The company is expected to start trading at $36 per share.

Over the past two years, PayPal has shown strong growth. As you can see in the above chart, PayPal’s year-over-year revenue growth did slow down a bit in 1Q15. But it was due mainly to the strong US dollar (UUP). Without the currency issues, PayPal’s revenue growth would have been 17%.

In the second half of the year, both stand-alone companies will focus on their respective business plans and work to improve their capital returns. eBay has invested $5 billion in PayPal to help the new independent entity take its initial steps.

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PayPal to acquire digital money transfer provider Xoom

After eBay and PayPal separate and with funding from eBay, PayPal is set to acquire digital money transfer provider Xoom Corporation for $890 million. The intent is to expand its presence in countries like Mexico, India, and China.

PayPal will also look for opportunities to strike a deal with eBay’s competitors, including Amazon (AMZN) and Alibaba(BABA). eBay will remain PayPal’s client.

PayPal will need to continue to innovate, since competition from Apple (AAPL) and Google (GOOG) in the mobile payments space is rising rapidly. A few months back, Google (GOOG) launched its revamped Android Pay mobile payment service at its I/O conference.

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