uploads/2017/11/3-62.jpg

How PayPal Grew Bigger than Its Parent eBay

By

Updated

PayPal more than doubled parent in market cap

At the time PayPal (PYPL) was reporting its 3Q17 results on October 19, it had a market capitalization (or market cap) of $80.8 billion. In contrast, eBay (EBAY), the e-commerce company PayPal separated from in 2015, closed with a market cap of $39.7 billion on October 18, the day of its 3Q17 earnings report.

PayPal’s fintech (financial technology) peers Square (SQ), LendingClub (LC), and On Deck Capital (ONDK) closed with market caps of $14.3 billion, $2.3 billion, and $382.9 million on the day they released their 3Q17 results. Fiserv (FISV), another rival of PayPal in the payments processing industry closed with a market cap of $27 billion on October 31, the day it reported its 3Q17 earnings.

PayPal’s revenue grew 21%

Since breaking away from eBay in 2015, PayPal stock has risen faster than eBay stock, giving it a market cap larger than that of its parent. This rapid rise in PayPal stock has come at a time when PayPal’s sales have also increased faster than eBay’s sales. In 3Q17, PayPal’s revenue rose 21% YoY (year-over-year) compared with an 8.6% YoY increase in eBay revenue in the same period.

PayPal has sustained double-digit revenue growth since separating from eBay, while over the same period, eBay’s revenues have largely increased at a single-digit percentage rate.

8.2 million accounts added

The growth in PayPal’s top line has also corresponded closely with the increase in its customer base. PayPal closed 3Q17 with 218 million active customer accounts compared with 192 million accounts in the same period last year. The company added 8.2 million new active customer accounts in 3Q17.

More From Market Realist