102.65 +0.10 (0.10%)
After hours: 6:38PM EST
|Bid||102.39 x 3100|
|Ask||102.54 x 2900|
|Day's range||102.15 - 104.45|
|52-week range||76.70 - 121.48|
|Beta (3Y monthly)||0.96|
|PE ratio (TTM)||48.15|
|Earnings date||28 Jan 2020 - 3 Feb 2020|
|Forward dividend & yield||N/A (N/A)|
|1y target est||126.00|
(Bloomberg) -- PayPal Holdings Inc. fell as much as 1.9% early Thursday after the payments company said it will acquire online coupon site Honey Science Corp. for about $4 billion, its largest-ever acquisition. Some analysts praised the deal’s strategy and growth potential, but others flagged the steep price and wondered whether Honey was the best M&A target for PayPal.Here’s a sample of the latest commentary:SunTrust, Andrew JeffreyJeffrey in a note recommended that investors stay on the sidelines as “this is not the deal PayPal needs to secure its position among premium valued network stocks.”Instead, SunTrust views Honey as a “sort of ‘shoot-the-moon’ attempt to more deeply entrench PayPal in the consumer e-commerce experience while also bolstering its merchant value proposition. Unfortunately for investors, the company is paying a large premium, in our opinion, for an unproven solution which does little to advance its ability to monetize beyond e-commerce.”Though PayPal can probably “elegantly integrate Honey into its core app and Venmo,” it may not “significantly advance the company’s market share amid rising competition,” he said. The deal also “does nothing to extend PayPal’s physical world reach, where 85%-plus of all transaction volume occurs.” Jeffrey did flag one positive: Honey is a small acquisition relative to PayPal’s market cap, which may limit downside risk. He rates shares hold, with a price target of $105.Raymond James, John Davis“While the strategic rationale makes a great deal of sense as it touches both the consumer and merchant side of PayPal’s platform and the cross sell opportunities are significant, it certainly didn’t come cheap,” Davis wrote. “Any way you slice it, $4 billion is a lot to pay for a company making little to no money.” Rates shares outperform, with a target price of $122.MoffettNathanson, Lisa EllisThe acquisition is “strategically attractive” for PayPal, as it’s imperative for the firm to strengthen its network by enhancing merchant and consumer value propositions as the “wallet wars” wage on, Ellis wrote in a note.Buying Honey is “well aligned with this critical strategic priority,” as Honey’s tools will strengthen PayPal’s suite of merchant services while integrating Honey’s services into PayPal and Venmo apps will boost consumer engagement, she said.Ellis views the $4 billion price as “consistent with comps for other small, high growth firms in payments and tech,” like PayPal’s iZettle deal. She rates shares buy, with a target price of $135.BofA, Jason KupferbergKupferberg views the deal as “strategically compelling” as PayPal can leverage the high-growth asset to “generate meaningful revenue synergies over time.” That’s even as the $4 billion value “represents a steep revenue multiple,” he said.The purchase also “represents a new breed of acquisition,” he added, as PayPal has in the past mostly acquired payments companies but now seeks to go “deeper into the e-commerce ecosystem by moving up to the front-end of the shopping experience as opposed to being on the back-end at checkout.” He flagged that Honey is working with 30,000 merchants including Expedia, Macy’s, Priceline and Sephora.Kupferberg expects PayPal will update its outlook on its fourth-quarter earnings call in January to include Honey. He doesn’t see the proposed deal changing the company’s capital allocation policy, as PayPal “has the balance sheet flexibility for continued share repurchases and additional M&A.” Keeps buy rating, target $127.(Updates share trading in first paragraph.)To contact the reporter on this story: Felice Maranz in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Steven Fromm, Janet FreundFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- PayPal Holdings Inc. will acquire Honey Science Corp. for about $4 billion, its largest-ever acquisition, adding a startup that amasses valuable data on consumer buying habits and doles out coupons for online bargains.About 17 million people use Honey apps or web browser extensions to find discounts at online shopping sites. The startup was profitable in 2018, PayPal said in a statement. Shares of the payments giant were little changed in extended trading.Honey is valued at almost twice what PayPal paid for its next-largest deal, iZettle, the Swedish provider of small-business services it purchased in 2018, and marks the first major acquisition this year. Chief Executive Officer Dan Schulman has signaled that PayPal, with more than $10 billion in cash, is on the hunt for more deals after a string of takeovers last year that included Hyperwallet and Simility.“You can expect us to be acquisitive going forward,” Schulman said on a conference call with analysts this summer. PayPal looks at hundreds of potential deals every quarter and sees them as a way to expand globally and accelerate development of new products, he said. Schulman described acquisitions as “a part of who we are on an ongoing basis.”Honey, which was founded in 2012, will keep its base in Los Angeles, and the founders will continue to run the business. The company’s services include a browser extension that automatically applies coupons at e-commerce sites. In a statement, PayPal said that Honey’s capabilities will give its customers a better shopping experience, and help merchants drive sales, partly with more timely and personalized offers.Mark Palmer, an analyst at BTIG, said the acquisition would help PayPal make “significant advances” toward becoming more relevant to users. It could also give customers and merchants a reason to choose PayPal “in the face of increasing competition from tech companies, such as Facebook Pay.”As a shopping-focused browser extension, Honey has access to large amounts of customer data. Lisa Ellis, an analyst at MoffettNathanson, said that PayPal typically uses that information for purposes like fraud prevention. She added that if there were to be a privacy issue over data at the combined company that limited its use, some abilities, like targeted offers, could be curtailed.(Updates with Honey details starting in the fifth paragraph.)To contact the reporter on this story: Julie Verhage in New York at email@example.comTo contact the editors responsible for this story: Mark Milian at firstname.lastname@example.org, ;Tom Giles at email@example.com, Anne VanderMeyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The deal for the seven-year-old platform that finds and applies coupon codes on popular sites and helps consumers save money will add to PayPal's ability to help merchants deliver offers, PayPal said. PayPal and its mobile payment service Venmo have more than 275 million active consumer accounts. The deal is expected to close in 2020 and would add to PayPal's adjusted profit in 2021.
PornHub, owned by Luxembourg-headquartered company MindGeek, said it was "devastated by PayPal's decision to stop payouts to over a hundred thousand performers who rely on them for their livelihoods". MindGeek did not respond to a Reuters request for comment.
(Bloomberg) -- Facebook Inc. is consolidating its various payments features into a single product with a new name, with plans to roll it out across all of the company’s apps.Facebook Pay is a rebranding of a number of existing payment features into one user experience across the social network’s apps, the company said Tuesday. You can already make payments in the form of donations and in-app purchases inside various Facebook-owned products, and soon you’ll be able to do that across Facebook’s apps through one system that will store user credit and debit cards.The move comes as Facebook is integrating its services, especially the messaging applications, so that users can easily move between apps and understand Instagram, WhatsApp and Messenger are owned by the same company. Facebook introduced new corporate branding earlier this month to give more clarity on what products it owns, and the company is unifying its three messaging services so users of one can send messages to people on the others.Some critics have said these efforts are a way for Facebook to defend itself against a possible breakup. The company is under antitrust scrutiny from multiple regulatory agencies, and the idea of unifying its branding, and its messaging and payments products, could be an effort to keep regulators from trying to spin off parts of the Facebook empire.People won’t be able to use Facebook Pay to hold cash, but can use it to store their credit or debit card information for easier use. Existing payments partners like Stripe Inc. and PayPal Holdings Inc. will continue to process payments for the Menlo Park, California-based company. Facebook is rolling out Facebook Pay to its core social network and Messenger in the U.S. beginning this week, with plans to bring it to Instagram and WhatsApp down the line as well.Facebook is also building a separate digital wallet, called Calibra, for storing and spending its proposed digital currency Libra. That wallet doesn’t yet exist and a Facebook spokeswoman said it is a separate effort from Facebook Pay.\--With assistance from Julie Verhage.To contact the reporters on this story: Kurt Wagner in San Francisco at firstname.lastname@example.org;Sarah Frier in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- China’s most ubiquitous company is hiding one of its most valuable assets. That needs to change.Tencent Holdings Ltd., best known for the WeChat messenger that almost everyone in the country uses, has a growing fintech business. But it’s getting overshadowed by the games and social media divisions. By spinning it off into a new company, with a move to a separate listing, management could unlock as much as $230 billion in value. That would make the entity China’s fourth-largest listed company and the world’s sixth-biggest financial services firm.Such a move could help Tencent retake some of the limelight that it’s about to share with Alibaba Group Holding Ltd. once that company lists in Hong Kong. Alibaba’s fintech unit, Ant Financial Services Group, already functions as a separate business with the e-commerce giant holding a 33% stake. At Tencent, fintech and business services accounted for 26% of revenue last quarter. The Shenzhen-based company is due to report third-quarter earnings late Wednesday.I estimate that revenue from Tencent’s fintech business grew in excess of 70% last year.(1) The vast majority of that was payments. Yet Tencent also offers other products such as wealth management and has a 30% stake in WeBank, China’s first online-only bank, which was founded five years ago. Data on its fintech profits are hard to ascertain, yet information disclosed by Alibaba shows that Ant Financial was unprofitable last year, so Tencent could be in a similar boat. That’s not necessarily a bad thing. The two rivals are startups in the classic sense, using fast revenue growth driven by marketing and incentives to gain ground fast. A major reason why both have lost money in recent years is due to low take rates, the commissions received from processing payments, because they’ve offered discounts to consumers and merchants. A turnaround could be near, Sanford C Bernstein senior analyst David Dai wrote in a recent series on China’s fintech sector. He estimates that a maturing market will ease cut-throat competition and allow both companies to take a greater share of the money that sloshes through their payments platforms.As a result, Tencent’s payment business (TenPay) alone could be worth $137 billion, compared to $127 billion for Ant’s AliPay, the Bernstein team figures. HSBC Holdings Plc uses two methodologies(2) to come up with an estimated value of around $128 billion. Throw in the other products, and Bernstein calculates a base-case valuation for Tencent’s fintech unit of $160 billion, going as high as $230 billion. This indicates that 40% to 58% of Tencent’s current market cap is locked up in this hitherto hidden division. Bernstein has a base case of $210 billion for Ant, reaching as high as $320 billion.Payments spinoffs have proven to be lucrative in the past. EBay Inc. proved it with PayPal Holdings Inc. in 2015, with the latter posting a 177% normalized return since then, outpacing the 145% rise in the S&P Data Processing sub-index which includes Visa Inc. and Mastercard Inc. PayPal also trounced both eBay (35%) and the S&P 500 (49%). Square Inc., another payments provider, has been one of the hottest stocks of the past decade, returning more than 590% since its initial public offering in 2015.A more recent example comes from India, where Walmart Inc. is reported to be spinning off payments business PhonePe from local e-commerce company Flipkart Group, which it acquired last year. That transaction could turn a $20.8 billion startup into two unicorns with a combined value of more than $30 billion. Tencent doesn’t need to rush to list this fintech unit. Appetite for mega IPOs is likely to be satiated by Alibaba’s Hong Kong listing and that of Saudi Aramco over the next few months. And there’s a long runway of big startups ready for their moment in the sun. By merely making it a separate entity, management can signal intent and allow investors to start re-rating Tencent’s stock accordingly.An offering may not even be necessary, since Tencent is already sitting on more cash than it needs. Instead, the company could distribute shares in Tencent Fintech to existing shareholders, and then directly list the stock. That’s similar to the approach advocated by activist investor Dan Loeb for a Sony Corp. split.Tencent is sitting on a bright light in this fintech unit. Time to let it shine.(Updates to include reference to third-quarter earnings schedule in third paragraph.)(1) The "others" category includes fintech, cloud, film & TV. Tencent noted that fintech is the major component and gave a figure for cloudbut not content.(2) HSBC Approach 1: valuation per user. Approach 2: Using Tencent operating margins applied to its payments business, then comparing to peers.To contact the author of this story: Tim Culpan at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Uber’s stock sank to a record low Wednesday, as early investors and employees took advantage of the first opportunity they had to unload the stock since the ride-hailing giant’s disastrous IPO six months ago.
As the government continues to struggle with whether Facebook (FB) should be separated from all its parts, the company has taken another measure to ensure that it's virtually impossible.
The UK’s Labour Party wants to stop Google’s acquisition of Fitbit. The UK previously delayed PayPal’s closing of the iZettle acquisition.
Square (SQ) is set to report its quarterly financial results after the closing bell on Wednesday, November 6. The fintech firm has struggled over the last year. Now the question is will earnings be the positive catalyst that Square stock needs?
Facebook (FB) shares have jumped 11% in the past month and the social company recently topped quarterly estimates amid ongoing political scrutiny. The question is should investors buy Facebook stock right now?
Alternative options, such as cryptocurrencies or payment platforms like PayPal (PYPL), may impact banks in the long term. They are here to stay.
The vast majority of big and small web retail companies are increasingly looking abroad for growth opportunities, data from Visa shows.
For most investors, the earnings season is a high-stake environment. Here's a summary of Microsoft's and PayPal's performance in their last quarter.