PayPal Expands in Payment Solutions Market With Hyperwallet

PayPal Holdings, Inc. PYPL has entered into a definitive agreement to take over Hyperwallet in a deal worth $400 million. The deal is in sync with the company’s intention of expanding its share in the online payment market.

Hyperwallet is a payout platform with operations worldwide. It provides integrated payment solutions to enterprises, marketplaces, e-commerce and on-demand platforms. Consequently, PayPal will be able to offer an end-to-end payment solution to marketplaces and e-commerce companies, making their payment process smoother and hassle free.

Per the terms of the deal, the merchants on the company’s platform will get several payment process options like prepaid card, bank account, debit card, cash pickup and PayPal checking account.

Further, they will have access to more than 200 markets. This will enhance their payment distribution capabilities.

In fact, the latest move of PayPal will expand and enhance its payment offerings on a global basis which is likely to attract more merchants to its platform. This will improve the merchant base of the company, in turn aiding top-line growth in the long haul.

Coming to the price performance, shares of PayPal have returned 60.4% over a year, outperforming the industry’s rally of 38%.

E-commerce Market Holds Promise

In today’s fast moving world, e-commerce has gained immense popularity. It will continue to gain traction in the long haul with the increased penetration of internet and mobile phones. The e-commerce market has resulted in the emergence of online payment services and apps.

With the robust payout platform of Hyperwallet, PayPal has made its foray into the global e-commerce market which holds great potential.

According to data from Statista, revenues in this sector are expected to hit $1.7 trillion in 2018 and $2.5 trillion in 2022 by growing at a CAGR of 9.6% between 2018 and 2022.

Per Technavio latest report, the global e-commerce payment market is expected to generate $135 billion by 2022.

We believe, PayPal is well poised to leverage e-commerce sector’s growth potential with strong payment solutions.

PayPal Holdings, Inc. Revenue (TTM)

PayPal Holdings, Inc. Revenue (TTM) | PayPal Holdings, Inc. Quote

Expanding Portfolio & Strategic Acquisitions

Over the past few years, acquisitions have played a significant role in shaping the company’s growth trajectory by adding strength to its product portfolio.

The latest deal bodes well for the company’s strong efforts toward expansion of product portfolio.

Recently, the company completed the acquisition of Jetlore which leveraged its portfolio with AI capabilities. Further, the company’s buyout of iZettle, a developer of small, wireless chip readers aided its global expansion.

According to the latest report from Statista, the total transaction value in the digital payment market is anticipated to reach $3.3 trillion in 2018 and is likely to grow at a CAGR of 13.5% between 2018 and 2022. Further, it is expected to reach $5.4 trillion by 2022.

Consequently, PayPal’s strategic acquisitions along with its well performing payment platforms — Braintree, Venmo and Xoom will continue support it in gaining momentum in this rapidly growing market.

Zacks Rank & Stocks to Consider

Currently, PayPal carries a Zacks Rank #3 (Hold).

A few better-ranked stocks that can be considered in the broader technology sector are Twitter TWTR, Upland Software UPLD and Attunity ATTU. All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Twitter, Upland Software and Attunity is currently pegged at 23.1%, 20% and 20%, respectively.

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