An analysis of Paypal (PYPL)

1. PayPal

2. Company Overview
 Founded in 1998
 Became a subsidiary of eBay in 2002
 Separated from eBay in July 2015

3. Business
 Payments Platform
 PayPal, Venmo, Xoom
 Gateway services
 Braintree
 Business loan products
 PayPal Working Capital, Swift Financial
 PayPal keeps acquiring companies e.g. Swift Financial,
Xoom

4. Key Operating Metrics
 The total payment volume is growing
 The total take rate is decreasing
 The transaction and loan loss rate will decrease

5. SWOT Analysis
Strengths
 Dominant player in the
ecommerce segments
 Extending through
strategic partners
 Protecting Merchants and
Customers
Weaknesses
 High exposure to risk and
frauds
 Controversies regarding
payment transactions

6. SWOT Analysis
Opportunities
 Cashless economies
 Growth in ecommerce
markets
Threats
 Competition in market
 Separation from eBay

7. Performance
Announced 2017
1Q result
eBay announced to
dump PayPal

8. Valuation
 DCF value is lower than the current stock price
 DCF valuation is less valuable
 PE and P/B ratio are lower than the peers
 Suggest that it is undervalued
Source: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datacurrent.html