SHOCKING! PayPal Hit with Low Share Price, Threatening M&A Plans

Introduction

PayPal Inc, the renowned online payment company, has announced the appointment of new CEO Alex Chriss, paving the way for a potential new era of acquisitions. With a history of successful deals including the purchase of iZettle startup payments for $2.2 billion and price comparison app Honey for $4 billion, PayPal is looking to expand its empire beyond its main payment business.

Struggles and Setbacks

Less than two years ago, PayPal had ambitious plans to acquire popular virtual scrapbooking company Pinterest for a staggering $45 billion. However, stuttering growth forced the company to suspend those plans and focus on cost cuts instead. This setback, along with a nearly 80% decrease in share price, has hindered PayPal’s ability to engage in big business deals.

New Leadership, New Opportunities

The appointment of Alex Chriss as the new CEO brings hope for a turnaround. Chriss, known for his role in facilitating Intuit’s acquisition of marketing firm MailChimp for $12 billion, has the potential to lead PayPal into a new phase of growth through strategic acquisitions. This article will explore the future prospects and challenges for PayPal under Chriss’ leadership.

Expanding the Empire

Amidst the COVID-19 pandemic-driven online shopping boom, PayPal envisioned acquisitions that could transform it into a WeChat-style super app encompassing payments, savings, and shopping. However, with competition from banks and Apple’s rapidly growing one-click services, PayPal faces challenges in maintaining its market dominance.

Caution in Mergers and Acquisitions

While mergers and acquisitions can potentially increase sales and market reach, careful consideration is required to ensure meaningful benefits for PayPal. Simply acquiring companies with large user bases, such as Pinterest, may not necessarily align with PayPal’s goals. Instead, Chriss should focus on targeting companies in the financial services sector rather than social media.

Unique Insights and Perspectives

Delving deeper into the subject matter, it is crucial to understand the implications and challenges faced by PayPal in its quest for expansion. Here are some unique insights and perspectives:

1. The Importance of Scalable Growth

PayPal’s revenue growth, which once reached impressive figures between 18% and 20%, is projected to be less than 8% this year. This decline raises questions about the company’s ability to achieve its targets of doubling accounts receivable to 750 million and free cash flow to $10 billion by 2025. To sustain growth, PayPal needs to explore avenues that enable scalable expansion beyond its core payment business.

2. Navigating the Competitive Landscape

As PayPal faces competition from traditional banks and tech giants like Apple, it needs to differentiate itself and offer unique value propositions to users. The company should leverage its recognizable brand, convenience, and defensible legacy position to create innovative products and services that cater to changing consumer preferences.

3. Leveraging Technology and Partnerships

In the rapidly evolving digital landscape, PayPal can harness the power of technology and strategic partnerships to stay ahead of the curve. Exploring collaborations with fintech startups and established players in the financial services industry can provide access to new markets, technologies, and customer segments.

4. Embracing Financial Inclusion

With over 431 million users globally, PayPal has the potential to drive financial inclusion by empowering underserved populations. By expanding its services to include savings, lending, and other financial solutions, PayPal can make a meaningful social impact while also capturing new revenue streams.

Summary

PayPal Inc, under the leadership of new CEO Alex Chriss, is looking to embark on a new era of acquisitions to fuel growth and expand its empire. While setbacks and challenges have impacted the company’s ability to engage in big business deals, the appointment of Chriss brings hope for a turnaround. Through strategic partnerships, leveraging technology, and embracing financial inclusion, PayPal can overcome competition and achieve scalable growth.

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Less than two years ago, PayPal’s M&A ambitions included a whopping $45 billion deal to buy a cute virtual scrapbooking company Pinterest. Stuttering growth forced the US online payments company to suspend those plans in favor of cost cuts. New CEO Alex Chriss could soon usher in a new era of acquisitions.

In announcing his appointment, PayPal’s board made sure to mention Chriss’ lead role in helping financial services firm Intuit buy marketing firm MailChimp for $12 billion. This is bigger than any PayPal deal, which includes buying iZettle startup payments for $2.2 billion in 2018 and price comparison app Honey for $4 billion in 2020.

PayPal wants to expand its empire. At the height of the pandemic-driven online shopping boom, it envisaged acquisitions that could transform it into a WeChat-style super app encompassing payments, savings and shopping.

Unfortunately, the share price has fallen nearly 80% since then. PayPal no longer has a hard currency to do big business with like Pinterest.

However, Chriss’ appointment is designed to bring about change. Activist investor Elliott Management’s stake in PayPal last year was a criticism of Chief Executive Officer Dan Schulman. He has led the company since its separation from eBay. Revenue growth, which once hovered between 18 and 20%, is expected to be less than 8% this year. Hopes of doubling accounts receivable to 750 million and free cash flow to $10 billion by 2025 are now off the table. At last count, the company had 431 million users and an annual cash flow of just over $5 billion.

PayPal is now a quarter of a century old. It has a recognizable brand known for convenience with a defensible legacy position. But its main payment business is in competition with banks and Apple’s rapidly growing one-click services.

Expansion through mergers and acquisitions could increase sales, but requires caution. A company like Pinterest has many users but few benefits for PayPal. Chriss better seek targets in financial services, not social media.

Hear Lex Deputy Editor Elaine Moore talk to creators, businesses and critics about the next era of social media in the new FT Tech Tonic podcast series