Shares of PayPal Holdings (PYPL) climbed Wednesday as analysts said the company is gaining scale against such rivals as Square (SQ) with the help new acquisitions.
PayPal late Thursday agreed to acquire Simility, a fraud prevention technology company, for $120 million in cash. PayPal had been an investor in Simility, reports say. The company expects the deal to close next quarter.
And late Tuesday, PayPal said it was buying Hyperwallet Systems for $400 million. The Hyperwallet purchase should expand PayPal's global payments platform, analysts say. Hyperwallet operates an online that enables e-commerce firms to make payments to contractors, business partners, and others. Its platform converts currencies. The deal comes on the heels of PayPal's May purchase of iZettle, a mobile digital-payments processor, for $2.2 billion.
"After multiple acquisitions year-to-date, PayPal still has $10 billion in its war chest," Wedbush analyst Moshe Katri said in a report to clients. "Strategically, the iZettle and Hyperwallet acquisitions place PayPal at par competitively with Square and Adyen."
Shares in PayPal were off 1.1% near 85 on the stock market today. PayPal stock is trying to break out of a 20-week consolidation base and go past a buy point of 86.42. Shares briefly topped that pivot point in intraday trading Wednesday and Thursday, but ultimately retreated below that level.
PayPal Sheds EBay Worries
Worries over the phaseout of its relationship with former parent eBay (EBAY) pressured PayPal stock earlier this year. The stock has gained momentum since the company reported first-quarter earnings that topped expectations.
PayPal said it expects the Hyperwallet deal to close in the December quarter.
"Other players in this space are Payoneer, Earthport, and even Western Union, which can be considered a cross-border payout network albeit an expensive one," Mizuho Securities analyst Thomas McCrohan said in his note to clients.
Ingenico Group also had been interested in Hyperwallet, whose clients include Home Away and Expedia Group (EXPE).
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