Paypal

North America Equity Research 26 June 2009 eBay, Inc An in-depth look at PayPals Business With eBay focusing on PayPal as the primary engine of its growth, we count a deeper look at the value of the Payments unit, and its growth opportunities all over the coming years. We await to believe the upper range of the high societys outlook for $4B-$5B in F11 revenues could be difficult to reach, but think $4B could be achievable. At a 20x multiple to our F11E segment Net Income, the PayPal business would be worth $9B. Off-eBay growth will be primaeval. We estimate that, by 2011, eCommerce and online travel will combine to be over $1 trillion worldwide, up from $770B in 2008. By our estimates, PayPal accounted for ~4.2% of the off-eBay volume of feature eCommerce and travel last year. We believe the number would need to inception to more than 6.0% in F11 in found for the company to meet the low end of its F11 revenue target. Increasing on-eBay penetration remains a driver. The increment of PayPal in international markets can be a key catalyst for increasing penetration, as the low-hanging fruit on the domestic site has largely been picked. Further, expanding credit offerings to make PayPal a possible option for higher-ticket items can help offset sluggish GMV growth.

BillMeLater should rectify longer-term funding mix. Segment margins in the two quarters since the BML attainment have been down 500 bps Y/Y. However, because BML is funded by dint of ACH, we think it can improve PayPals funding mix, and in conclusion drive better margins. Brand is a valuable asset. wholly among online-only players, PayPal has established a payment brand to compete with officer players such as Visa and MasterCard. We believe PayPal can continue to push penetration as an alternative payment program; alternatively, PayPal could try to expand its footprint in the payments ecosystem and become a merchant acquirer, focusing especially on smaller and mid-size merchants. eBay, Inc. (EBAY;EBAY US)... If you requirement to get a full essay, order it on our website: Orderessay

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