PYPL Shares Start Trading: eBay Spins-Off PayPal With Value Near $50 Billion

Shares of fresh eBay Inc. (NASDAQ: EBAY) spin-off PayPal Holdings, Inc. (NASDAQ: PYPL) began trading this morning, and briefly hit $42.55 per share at the day’s high, giving the online payment processing company a market capitalization near $52 billion. EBAY shares are trading up 3 percent on heavy volume.

The PYPL shares trading today are the result of a one-for-one spin-off agreement, where eBay shareholders of record at the close of trading on July 8 received one share of the new PYPL stock for each share of EBAY stock they owned.

With the PYPL shares currently trading near $41.00, PayPal is seen being valued at close to $15 million more than its former parent. PYPL shares traded as much as 7 percent higher earlier in the session, before pulling back.

Seven research firms have initiated PYPL shares with coverage, including: SunTrust Robinson Humphrey, who rates PYPL shares as a “Buy.” Robert W. Baird rates PYPL shares as “Outperform.” JPMorgan has initiated coverage on PYPL shares with an “Overweight” rating, and Wells Fargo has rated PYPL shares “Outperform.” Nomura initiated coverage on PYPL with a “Buy” rating, and Wedbush initiated coverage with a “Neutral” rating. Cantor Fitzgerald has also initiated coverage on PYPL shares with a “Buy” rating and price target of $48.

In an Investor’s Business Daily article, the JPMorgan analyst, Tien-tsin Huang, who initiated the firm’s coverage had this to say.

“PayPal sits at the epicenter of digital commerce, which is expected to account for $2.3 trillion in global purchase volume by 2017, representing 19 [percent] compounded growth (nearly two times faster than the U.S. payments market), as digital continues to take share from offline commerce.”

Currently, 10 analysts publish PYPL earnings per share estimates for 2015, and 11 for 2016. The 2015 PYPL EPS consensus is for $1.22, with figures increasing to $1.46 in 2016. 2015 and 2016 EPS figures represent growth of 258.8 percent and 19.7 percent, respectively.

Analysts expect PayPal to generate gross revenues of $9.21 billion in 2015, growing 16.4 percent to $10.71 billion in 2016.

The PYPL shares trading today represent the second time PayPal has taken its shares to the public. PayPal first offered shares in 2002 — they were acquired by eBay later that same year. The current PYPL shares are valued at more than 30 times what they were when eBay first acquired them.

PayPal processed in excess of $235 billion in total payments in 2014, which resulted in near $8 billion in revenues. 2014 also saw PayPal process $46 billion in mobile transactions.

PayPal is headed by Chief Executive Officer Dan Schulman. Schulman opened the NASDAQ today, before trading in PYPL shares began.

In a press release, issued shortly after PYPL began trading, Schulman stated the following.

“As the world’s open, digital payments platform and most trusted and popular digital wallet, we are excited to celebrate our listing day and embark on our next chapter. Mobile technology is transforming payments, making it easier, safer and more affordable for people to move and manage their money than ever before. As an independent company, we see a tremendous opportunity for PayPal to expand our role as a champion for consumers and partner to merchants, and to help shape the industry as money becomes digital at an increasingly rapid pace.”

PayPal has 169 million active customer accounts globally and processes payments in 26 currencies.

[Photo by Spencer Platt / Getty Images]