Pay Pal Analysis
Paypal has taken the payment processing world by storm since its inception. Just as the shift from many isolated banks to a centralized banking system with centralized payment frameworks changed the way that people exchanged money and conducted commerce, PayPal has done much the same thing. Rather than requiring people to always extend their checking and/or credit card information to customers or buyers, they are instead able to use companies like PayPal as an intermediary so as to ensure that payment is delivered but no banking information is compromised. It is not foolproof as there is still fraud and such but it is a much better option than the financial payment frameworks of yesteryear. While the model PayPal is using is not nearly perfected and while Android, Apple and others are joining the payment facilitation fray, PayPal is very well positioned.
Analysis
PayPal is a publicly traded company on the Nasdaq stock exchange. They have only been around since the late 1990's, having been founded in 1998, but they have already built up to nearly 17,000 employees. They are headquartered in San Jose, California and they fall under the financial and credit services industry. While facilitation of payments for a small sliver of many of the transactions is their specialty, they also extend credit themselves in many situations and they have a very heavy relationship with online auction giant eBay. At one point, PayPal was owned by eBay but the former has since divested of the latter. PayPal was a private endeavor for about four years before going public in 2002. Upon the initial formation of PayPal, the business actually went by the name Confinity. Also, its initial business niche was to provide security software for devices like PDA's and cellular phones. PayPal is not now nor has it ever been a family business. Rather, it was a group of entrepreneurs that worked together to form what would become PayPal. The impetus and motivation...
This motivation was to create a payment framework that allowed for better fraud protection and transaction facilitation. Just as one example, someone wanting to put a deposit down online for a car would previously have to mail cash or issue a credit card or check number. There are obviously risks in doing any of htose things. PayPal offered a solution to this by connecting to the bank accounts of both parties as an impartial and trustworthy intermediary so that the payment could be completed without any unnecessary revealing of checking account numbers, credit card numbers or any other sensitive data (PayPal) (Yahoo Finance).
The founders of the company were Max Levchin, Peter Thiel, Ken Howery and Luke Nosek. From 1998 to 1999, Confinity shifted to being known as PayPal and it emerged as a payment transfer service rather than its original security-only focus. In March 2000, the company merged with a company called x.com, which was founded by notorious entrepreneur Elon Musk. Musk has also been one of if not the main brain-trusts behind other cutting-edge companies like Tesla and Space-X. PayPal was snapped up by eBay two years later and this remained the case until the end of 2014 and beginning of 2015. PayPal grew a great deal while owned by eBay and at one point accounted for nearly one half of eBay's profits (PayPal) (Yahoo Finance).
The current major shareholders of PayPal are The Vanguard Group, Carl Icahn, State Street Corporation, and FMR LLC. Vanguard is the only one of those four that is above five percent, coming in at 5.47%. The other three top shareholders have between 3.23 and 3.78% of all outstanding shares. Vanguard's total share haul is 66 million while FMR has about 39 million. The other two are in the 40 to 50 million range. Customers of PayPal run the gamut. PayPal has both a consumer-facing portal as well as a business-facing one. In…
