PayPal Holdings Inc
29,15 EUR 2,16%
A14R7UAs PayPal nears the three-month mark since its spinoff from eBay , the company still seems to be finding its footing as an independent company. Since July, PayPal has launched several new products, announced some new partnerships and acquisitions, and hit some new milestones. The company launched PayPal.me, a peer-to-peer payment service akin to Venmo (also owned by PayPal), but for a more global user base. It acquired two companies, Xoom and Modest, to broaden its capabilities, and has expanded its One Touch payment service to new markets. It also increased prices for some U.S. merchants on October 1, which could be an effort to boost revenue now that it's on its own. And the company announced that Braintree, which is owned by PayPal and provides backend payment services for apps such as Uber and Hotel Tonight, is on track to process $50 billion in transactions in 2015, up from $12 billion in 2013 when it was acquired by PayPal. Despite these releases and announcements, PayPal shares have fallen as much as 16% since the spinoff. "This stock has fallen and fallen because people do not understand that it is the millennial's credit card," said TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio. "It is despised by analysts but that will change and it could join MasterCard and Visa as winners in the space. It is exceptionally well run by seasoned hand Dan Schulman." You see Jim Cramer on TV. Now, see where he invests his money and why PayPal is a core holding of his multi-million dollar portfolio. Want to be alerted before Jim Cramer buys or sells PYPL? Learn more now. That sentiment was shared by Canaccord Genuity analyst Michael Graham, who initiated coverage of PayPal with a Buy rating and $43 price target. "We expect PayPal to continue its steady growth trajectory, benefiting from the long-term shift to cashless payments and continued e-commerce growth," he wrote in a research note on September 25. To give a glimpse of where PayPal stands, the company processed more than $250 billion in online transactions last year, and eBay's most recent quarter (which included PayPal) showed a 28% increase in payment volume from the first quarter on a 19% increase in revenue. Active user accounts also grew by 11% over the first quarter, bringing PayPal's total user base to 169 million active accounts. When PayPal reports its third quarter earnings on October 28, we will get a better idea of how these numbers have held up post-spinoff. "The separation has gone very well and the company is continuing its excellent growth momentum," said Jonathan Auerbach, PayPal's SVP of Strategy and Growth. "We've got renewed focus and energy. PayPal has always been focused on payments and enhancing digital payments and will remain focused on that as an independent company." Auerbach said the company was "doubling down on innovation" and looking into partnerships and acquisitions to complement PayPal's organic growth. "There are opportunities now that we're independent to potentially partner with and serve some companies and customers that would have been reticent to do that as we were part of eBay," Auerbach said. He declined to comment on specific companies that would fit into that category. For the most part though, the separation has yet to have a huge impact on PayPal's business. "It'll take more time to watch it play out," said Larry Berlin, an analyst at First Analysis Corp who has the equivalent of a buy rating for PayPal with a price target of $50. "We expect the next six months to a year to be interesting." While eBay has gotten online payments down pat, one of the areas it has yet to really break into is in-store payments. A recent partnership with Macy's -- combined with PayPal's acquisition of payments startup Paydiant in March -- signals a renewed effort on PayPal's part to get more into that category as well, but it will likely take time for PayPal to really become a competitor in brick-and-mortar stores. "Our goal in-store is really to help merchants improve their in-store experiences," Auerbach said. "We don't want to be an app replacing a card swipe; we want to make the purchasing experience fundamentally different in-store." One example he gave was getting rid of the checkout line completely and allowing customers to check out on their phones wherever they are in store. It's no secret that PayPal is attracting new competitors every day now, with tech giants such as Apple , Google , and Facebook getting into mobile payments. "PayPal has a unique set of commerce assets tied to powerful secular trends, but we're waiting for the dust to settle before giving PayPal more credit," Pacific Crest analyst Josh Beck wrote in a research note on October 1. Beck gives PayPal a Sector Weight rating. "We think PayPal could meet or exceed results in the near term, but the growing commerce ambitions of Apple, Google, Samsung, Visa, MasterCard, Amex, Stripe, Square and Amazon raise the competitive intensity over the medium term." Nonetheless, Auerbach said he feels PayPal has the upper hand owing to its 15 years of experience in digital payments and risk management services. "We believe that we continue to be successful because we just have enormous competitive advantages," he said. "We also believe there's tremendous opportunity in our industry. We don't think it's going to be winner takes all." Plus, with $6.6 billion in cash, PayPal can always acquire another startup if it needs some help.