The highly anticipated Nasdaq debut of PayPal Holdings Inc’s IPO has given the company a market valuation of $50 billion. The company’s shares rose 5.9 percent in premarket trading on Monday.
The eBay Inc spinoff is expected to expand its business offering to more directly compete with other market leaders including Stripe and Square, and up-and-coming mobile payments options from tech giant Apple, Inc.
The company is also hoping to more openly compete with money transfer services such as Western Union Co. and Moneygram. CEO Dan Shulman told Reuters, “It’s clear that the potential for mobile technology to transform money extends beyond commerce. The vast majority of the world’s 7 billion people lack access to even basic financial services.”
PayPal shares traded at $40.62, up from Friday’s close of $38.35 when the shares were trading on a “when issued” basis.
“PayPal is the gorilla among independent digital payment service providers with more than 160 million active accounts, global scale and brand recognition,” J.P. Morgan analysts said.
PayPal was founded in the 90s by venture capitalist Peter Thiel, Tesla Motors and SpaceX CEO Elon Musk and several other partners. The company went public in 2002 and was acquired by eBay a short time later for $1.5 billion.
BMO capital Markets analysts said they expected investors to value PayPal relative to Visa Inc (V.N) and MasterCard Inc (MA.N), but added that PayPal had a relatively low EBITDA margin profile – 27 percent versus 60-70 percent for the two credit card giants.
In the meantime, PayPal is faced with the uphill battle of attracting users who have vastly changed their engagement in recent years. More buyers are moving to mobile payments, and in turn, they are using mobile-first applications to complete their payments.