PayPal Holdings Inc.: The online payment powerhouse

written on May 20, 2021

Back in the early 1990s, sending and receiving payments online between individuals was considered an impossible feat. Then came PayPal with its revolutionary platform to transform the burgeoning world of digital payments and to become a leader in the industry.

Maintaining its position at the forefront for more than 20 years against a rising number of fintech startups and tech giants like Apple (AAPL) and Google (GOOG/GOOGL), PayPal has leveraged technology to make financial services and commerce more convenient, affordable and secure, empowering millions of consumers and merchants to join and thrive in the global economy. With 391 million active users as of the first quarter of 2021 and processing 4.4 billion payment transactions during the same period, it comes as no surprise that the online payment powerhouse is the most popular digital wallet among U.S. consumers.

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A brief history of PayPal

Despite its relatively short history, PayPal’s ascend to the top has seen several ebbs, flows and tipping points. Originally established in 1998 by Max Levchin, Peter Thiel and Luke Nosek as Confinity, the company developed security software for handheld devices, however, it saw little success so the founders decided to create a digital wallet instead and target an untapped market - that of digital payments - at a time when the internet had slowly become an important element in the life of global consumers. After the first version of the company’s electronic payments system was launched in 1999, small businesses, online merchants and consumers quickly began signing on.

In 2000, Confinity merged with, an online banking company founded the previous year by none other than Elon Musk. Musk was so optimistic about the future success of Confinity, that he decided to terminate’s other internet banking operations and focus exclusively on digital payments. The company was eventually renamed to its current moniker and quickly became successful, so much so that PayPal users jumped from 1 million in March of 2000 to 5 million by the summer of the same year.

PayPal’s time as an independent company, however, was short lived following its IPO in 2002, as the company was purchased by eBay. With revenues into the billions, for eBay PayPal was one of the only ways to process digital payments so the merger gave the eCommerce platform a competitive payments-solution advantage at a time when most payments for items on the marketplace were made by either cheques or money orders sent through the mail. In turn, PayPal gained access to a massive customer base. By its Q1 2008 results, eBay had reported that total payment volume via PayPal increased 17% and for its eBay auction site it was up 61%.

Under eBay, PayPal made a number of acquisitions to further strengthen its product. It acquired VeriSign to provide added security support, while three years later it bought Fraud Sciences, a privately held Israeli start-up that developed online risk tools. It also forged a partnership with MasterCard, which led to the PayPal Secure Card service, which allowed customers to make payments on websites that do not accept PayPal directly. By the end of 2012, PayPal's annual payment volume processed was $150.07 billion and a year later, when it revamped its app and expanded its mobile app capabilities, it offered users the possibility to search for local shops and restaurants that accepted PayPal payments, order ahead and access their PayPal accounts.

By 2015, eBay spun off PayPal into a separate publicly traded company. It acquired digital money transfer company Xoom Corporation, giving it access to Xoom’s 1.3 million active U.S. customers at the time. In addition, it partnered with Visa to expand its consumer choice in payments and teamed up with several other big players amongst which include Bank of America, Barclays, JP Morgan Chase, American Express and may others. The company’s most recent acquisition was in 2020, when it purchased Honey for $4 billion, its largest acquisition to date.

As of 2021, PayPal operates in 202 markets and has 377 million active registered accounts. It has also become the first foreign payment platform approved to provide online payment services in China and starting from 2021, customers can use cryptocurrencies to shop at 29 million merchants on the network.

Fun fact

Have you heard of the PayPal mafia? Although the appellation may evoke images of an organised crime syndicate, this is a different type of gang. A group of former PayPal alumni who have since founded and developed several other tech companies among which include Tesla (TSLA), Palantir Technologies (PLTR) and many others, the group became so prolific that the term PayPal mafia was coined. The group has also been featured in a 2007 Fortune magazine article.

When did PayPal go public?

PayPal debuted on the Nasdaq in 2002, offering 5.4 million shares at a share price of $13 per share, giving the company a market cap of less than $1 billion. The IPO was considered a success, with the stock peaking at $22 and closing at $20 on its launch day, while it generated close to $70 million.

How much would an original position of $10,000 in PayPal be worth today?

When PayPal merged with eBay, PayPal shareholders received 0.39 shares of eBay for every share of PayPal. Over the years, the eBay stock split two times, undergoing a 2-for-1 split in 2003 and 2005. However, in 2015, following pressure from investors, eBay agreed to make PayPal a separate business once again.

A $10,000 investment at the end of 2015 up to 11th May 2021 would have translated into an investment value of $68,674. This means that this stock delivered an amazing 587% total return, resulting in 43% annualised returns. During this period, PayPal did not pay a dividend.

Is PayPal a buy?

The Covid-19 pandemic has accelerated the growth of digital payment platforms, including that of PayPal at the expense of the traditional banking sector. As a result, for the full year 2020, revenue grew 20.7% to $21.45 billion. This beat revenue expectations of $21.42 billion. During the fourth quarter of 2020, its revenue grew by roughly 25% year-on-year, while for the first quarter of 2021, PayPal reported the strongest first quarter results in its history, announcing a $1.22 adjusted earnings per share, whereas profit rose to $1.10 billion from $84 million a year earlier, adding 14.5 million net new active accounts and bringing its total user base to 392 million.

A high-quality tech stock with an impressive growth record and exciting future prospects, the stock has offered shareholders good returns after it has more than quintupled over the last five years and as its growth has accelerated in the past year thanks to the COVID-19 pandemic, the stock has nearly doubled in the past 12 months alone.

The stock started the year at $234.20, then climbed to an all-time high of $309.14 intraday on February 16, after which it fell to a three-month low of $226.09 in March as stocks sold off across the technology sector. The stock then soared to $276.9 on April 13. The release of its earnings led its shares to skyrocket and gain as much as 5.5% in extended trading on May 5, while the stock has risen about 6.15% since the start of the year. In contrast, the Nasdaq is up about 4.13% over the same period (till 11th May 2021).

What’s next for PayPal?

The fintech powerhouse appears to have a rosy outlook and as trends in their favour have all the more accelerated over the past year, this is only expected to carry on. It also has its hands in all the right areas. Cryptocurrency in particular has been a key growth engine for the company. Indeed, in late November 2020, PayPal launched a cryptocurrency trading service which allows clients to buy and sell Bitcoin, while starting in early 2021, customers are also able to use cryptocurrencies to shop at the 29 million merchants on its network.

At the same time, the company has announced the rollout of a next-generation, digital wallet to be launched in the third quarter. The product is set to be an all-in-one, personalised app that will provide increasingly customised and unique shopping, financial services, as well as payments.

PayPal has also become available on Chinese eCommerce giant Alibaba’s wholesale marketplace and AliExpress, its international retail marketplace. On the other hand, a commercial agreement forged with payment infrastructure provider Flutterwave is enabling businesses in Africa to receive PayPal payments. Agreements such as these are crucial since they power the company to broaden its reach and tap into growing marketplaces from across the globe.

As the online payment services industry continues to expand with the shift to eCommerce and the adoption of cryptocurrencies accelerates, PayPal is set to benefit immensely.

How to invest in Paypal (PYPL) stock with Moneybase Invest

Ready to buy a share in Paypal (PYPL)? Your first step to tapping into a world of investment opportunities with Moneybase Invest is to sign up and open an account.

To do so:

  • Download the app from either Google Play or the Apple App Store. Alternatively, you may access Moneybase Invest on your desktop by visiting
  • Once you’ve onboarded successfully and have funded your account, head over to the search bar at the top of your screen and input either the company name or ticker symbol.
  • Select the instrument of your choice from the list and then click on the Buy button on the window located at the bottom of your screen.
  • On the New Order page, input the number of shares you would like to purchase and hit the Place Buy Order. PYPL has been added to your portfolio.

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Life’s full of mysteries. Your money shouldn’t be one of them.