PayPal was analyzed using several frameworks: 1) A 5 Forces analysis showed sellers have low bargaining power while buyers can go elsewhere, and entry is difficult due to network effects. 2) A SWOT analysis found strengths in global expansion and account growth, while weaknesses included delayed monetization and economic downturn risks. 3) Key metrics like total payment volume grew 24% YoY and transaction margins remained high. 4) The document provided commentary on PayPal's stock guidance and valuation.

1. 1
PayPal (PYPL)
Ken.lin
2019/09/22

2. 2
5F Analysis -
● Sellers –
○ Merchants – money side; low bargaining power
○ Partnership – Diversified partnerships include UBER, iZettle, Paymentus, etc.
● Buyers
○ Individual users – compensate side;
● Substitutes
○ Credit card/ Debit card
● Entrants
○ High barriers for entrant as being a two-sided market
● Competitors
○ SQ, MA, VISA, AXP – leveraging the existing network

3. 3
SWOT Analysis
● Strength – global expansion; net active accounts increase at double digit speed;
improved churn rate; off-line service.
● Weakness – delayed monetarization; Global economy downturn; change in pricing
structure.
● Opportunity – acquisition opportunity boost up the user base; transition from
physical payment to digital payment.
● Threat – strong US dollar as the business expands; technology improvement in
competitors’ products; information leakage.

4. 4
Key Metrics –
• 17% growth in active
accounts
• Along with increasing
participating rate
• TPV growth rate 24%
YoY
• Transaction margin
remains high level

5. 5
Guidance –

6. 6
Valuation –
● Target from 150 based on peer-comparison in forward PER
● To 300 given the hypergrowth of 10 yrs

7. 7
PYPL [D] – Low Stoch RSI; fluctuate between 98 and 105

8. 8
Key Ideas (PYPL&AXP)-
●Titles –
○PayPal faces audit Down Under
○PayPal to pay small fine to U.K. over iZettle acquisition
○Wedbush sees PayPal split with EBay 'better than feared’
○Financials drop as Treasurys rally
⚫News –
○Australia's financial intelligence agency has ordered an audit of global money transfers by digital payments giant PayPal (NASDAQ:PYPL) amid concerns they are
facilitating serious crimes, including child exploitation.
○The U.K.‘s Competition and Markets Authority orders PayPal (PYPL -0.5%) to pay a £250,000 ($312,000) fine for violating rules related to its $2.2B acquisition of
Swedish startup iZettle. PayPal had promised the CMA that any integration activities would be confined to non-U.K. potential customers, however PayPal conducted
cross-selling pilot campaigns, intended to target customers in France and German, that led to contacting U.K. potential customers.
○Wedbush analyst Moshe Katri sees PayPal‘s (NASDAQ:PYPL) pending payments separation from EBay likely faring “better than feared” as the high-margin
business is expected to remain “sticky.” An expected pricing reset on PayPal-branded volume will likely be counterbalanced by lower costs related to EBay-
dedicated service, Katri wrote.
○The Financial Select Sector SPDR ETF (NYSEARCA:XLF) slides 1.2% in late afternoon trading, outpacing the S&P 500's 1.0% decline. YTD, though, XLF is up
18%, slightly lagging the S&P's 19% gain.