After more than a decade of being part of eBay Inc. , PayPal will return to the stock market as an individual company. Shares of PayPal (PYPL.O) jumped up 11% in value as people anticipate the company’s return to NASDAQ. With that rise, and adjusting for market stabilization, PayPal is now valued at about $52 Billion. Online payments have changed considerably since 2002 when eBay acquired PayPal, and the popularity of PayPal has lead to a relationship that hinders the potential of PayPal. Processing over $235 billion in 2014, PayPal handles some massive transaction volume on a daily basis, an amount so substantial that it would benefit the company to be able to establish new relationships and partnerships with companies in the space that would not have been possible before.
PayPal Soars, eBay Snores
While the separation has been beneficial to PayPal in the value of their stock, eBay took a 4.7% dip in value, pushing the company’s value down to $32 billion.
“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.
“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,” Schulman told Reuters.
With the new separation, PayPal is looking to compete with large financial companies like Western Union. eBay, by dropping ownership of PayPal, is seeking to focus entirely on their online marketplace which has lost popularity with the surge of Amazon Prime. PayPal has already worked to establish a relationship with Braintree to integrate Bitcoin payments. With the newfound freedom of being an independent company perhaps PayPal will put more emphasis on digital payments like Bitcoin and move towards faster transactions with lower speeds.
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