PayPal just got dumped by eBay, but they might not even care

1 year ago by Jeremy Bloom

It's been 15 years since eBay ($NASDAQ:EBAY) and PayPal ($NASDAQ:PYPL) tied the knot, so it's sad that the two online giants are breaking up. But don't worry, you don't have to choose sides - you can remain friends with both. And while some investors are worried how PayPal will do out there on its own, a quick run through the data tells us it should do just fine.

To continue the Valentines' Day breakup metaphor, the two companies have been living apart for two and a half years now (PayPal was spun off as its own company again on July 18, 2015). The terms of the separation included a five-year operating agreement, which is now expanded so that eBay customers will be able to continue to pay via PayPal through 2023, at least.

But PayPal has been eBay's #1 for more than 15 years, so that's a big change, especially since the mega-auction service will be hooking up with "another woman" for its processing - a hot little Dutch number called Adyen (but not until the end of the 5 year agreement, in 2020).

It's all going down in slow motion. "Given our long history with eBay buyers and sellers," PayPal CEO Dan Schulman told investors, "both Devin Wenig and I believe a manageable transition and sustained relationship is in the best interest of our mutual customers."

Hope it heals

While eBay is still PayPal's single largest client, its share of revenue has been dropping 

  • 29 percent of 2014 revenue
  • 26 percent in 2015
  • 22 percent in 2016

According to industry tracker, as of last year, PayPal was the preferred payment method of 12% of the US, and wordwide they had 227 million users (up from 84.3 million in 2010). 

If the company was in trouble, noboby told HR: job listings continue to hover near the 900 level, a pretty healthy place to be:

And nobody told the company's employees. They continue to be bullish on their empoyer, as indicated by PayPal's Glassdoor ratings. Insiders say business is looking up:

And insiders continue to recommend the company by 70+ percent:

By the books

The company processed an incredible $451 billion last year, and take a look at this amazing dollar-value growth, as laid out by Statista:

PayPal volume by Statista

That's a huge chunk of money, and fed profits of $620 million in just the last quarter (up from $390 million for Q4 2016). 

And mobile payments are growing even faster, up 52 percent last year:

paypal mobile volume

PayPal's Brain trust

One reason PayPal may not be looking backward: It's got its heart set on a new beau of its own. It's called Braintree, and it's in the process of tearing up the online and mobile payments space. Which may be why insiders at the Braintree division are even more bullish than PayPal as a whole. Both business outllook and recommend numbers are up in the stratospheric 85% range:

Merchants using Braintree include airbnb, Uber, and Eventbrite, as well as Internet icons GitHub, Dropbox, Yelp, and Stubhub.

As of last year they were processing more payments than chief rivals Stripe and Square combined. Everything's coming up roses for this happy couple.

But what's that out there on the horizon? Coinbase ($COINBASE) says they'll be rolling out a similarly simple button-based system to allow users to pay for online transactions using cryptocurrencies. Will that cut into PayPal's happiness (and profits)? Stay tuned...

Jeremy Bloom

When Jeremy Bloom isn't writing about energy, the environment, or the amazing strangeness of modern life, you can find him drinking really good single malt whisky...

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