PayPal Sees Huge Gains in Market Cap

October 20, 2017         By: Steven Anderson

If you ever needed a statement that made it clear mobile payments are a thing, and here to stay, you need only look to a recent slice of market data that makes it clear. PayPal’s market capitalization—an expression of the value of its stock—recently hit close to the $83 billion mark. That’s actually higher than American Express’ is, and there are reports that PayPal will blow past a few other major firms as well.

That $83 billion market cap represents a significant achievement. With another $6 billion in market value, PayPal would actually be worth more than Morgan Stanley. Another $10 billion, and it would pass Goldman Sachs. Even PayPal itself has been lapped by its own market cap; it started out life at just $47 billion two years ago, and that was when it spun off from eBay.

Morgan Stanley, in an odd move, actually upgraded its valuation of PayPal stock, noting that it was “…among the few large companies that can deliver high-teens revenue…with significant upside opportunities.”

Not every analyst believes that PayPal’s on the right track, however; Autonomous Research’s Craig Maurer suggested that those valuing PayPal weren’t allowing for potential failure. He considered those bullish on PayPal to be in “…the nothing-can-go-wrong camp,” as it was “…the only way to justify the valuation.”

On this Maurer may not be completely wrong. PayPal is currently, at last report, trading around 32 times forward earnings. That dwarfs even major firms like Mastercard—trading around 29 times earnings—and Visa, which trades 27. American Express is trading around 15 times forward earnings.

Regardless, PayPal’s making money, and doing a bang-up job of it. Between its own operations and those of subsidiaries like Venmo, there’s a lot of activity involved here. This isn’t some startup trading hope and fairy dust; this is a company with established profitability that’s been running for some time now. Granted, it’s possible the valuation might have some optimism built in, but in a way, every valuation has a little optimism built in.

No matter where you think PayPal should be in valuation, it’s clearly delivering a quality service, and will likely continue to do so for some time. That’s good news for those who use it, and those who invest in it.