posted on September 28, 2001 04:28:57 PM
WHATTYA THINK? GOOD INVESTMENT OR THROWING MONEY AWAY?
Online Payment Service PayPal Inc. Files for IPO
PALO ALTO, Calif. (Reuters) - PayPal Inc, an online payment service popular among customers of eBay Inc(Nasdaq:EBAY - news) and other Internet auction sites, Friday said it filed with the Securities and Exchange Commission (news - web sites) for an initial public offering.
The company said Smith Barney, Robertson Stephens Inc. and William Blair & Co. are managing the proposed offering.
PayPal has emerged as a leader among a flurry of online payment services that cropped up shortly after Internet retailers began appearing. Although most Internet customers continue to use traditional payment methods like credit cards, the PayPal model that enables online cash transfers, has gained a lot of traction among individuals who operate small businesses on eBay and often do not have the capacity to process credit cards.
posted on September 28, 2001 04:54:26 PM
it could be another ebay.remember when ebay went public at 18??
most of my ebay customers use paypal more than billpoint,some of my yahoo shoppers use paypal,i use paypal debit card at the post office and super markets and in just ten days,i saved 10 dollars thru their 1 1/2% cashback .
i dont expect the 1 1/2 cashback to be around forever but recently they roll out their VISA credit card.
nasdaq symbol PYPL, if you have money you can afford to risk,why not??
so far i have no problem with paypal,none of my customers ever complain to me about paypal and this is my sixth year selling on ebay and i just got a rubber check from an ebay bidder yesterday.
so if money is burning a hole in your pocket,buy some paypal!!
posted on September 28, 2001 06:13:15 PM
This might sound strange, but...
while I've personally been satisfied with PayPal as both a buyer and primarily a seller, I would not invest in them other than continuing to use them as a payment service.
The reason is...
I've had enough experience in the stock market to know that I'm no longer comfortable investing in companies that do not have a corner on the market. Yes, while it's true that the majority of my customers pay with PayPal, how many other payment service companies have sprung up since? Will PayPal (or is PayPal...) always be the number 1 choice among auction buyers/sellers? Will Billpoint or some other company start gaining more of a market share? Could happen I guess.
But since the online payment industry is a niche that is still rapidly evolving, count me out.
posted on September 28, 2001 07:47:34 PM
no one has a clear crystal ball to say paypal can stay on top in the future.
amzn has one click,ebay has billpoint,but paypal has diversified to offer more than just online payment service,debot card,credit card,money market account and directory of paypal shops,no one has gone that far.
of course one day it could be thrown out of ebay or billpoint comes up with a way so easy that we all want to press the billpoint button.
right now paypal has a carrot which it dangles in front of us sellers-cheaper rates and free wiretransfer.
it is risky,too bad the IPO market for dotcom is gone.
i would be interested if i know paypal is financially strong and the price is cheap relative to its balance sheets and future prospects
posted on September 28, 2001 07:54:36 PM
considering the all of the below factors
1. Economy is in for a recession
2. Dot com's are out of favor with most investors
3. sales are somewhat sluggest on the auction sites
4. PayPal has yet to turn a profit
5. The competition in third party payment services is still evolving.
6. Company has a lot of debt
With these factors in mind, it might be a good stock to short.
posted on September 28, 2001 08:08:24 PM
i have asked them once if they are interested in sponsoring malls since they have the directory of paypal shops,they said no,they are a financial services company.
i dont know how much debt they have,it is hard to imagine they have debts as they cant afford to service the debts,i would think they have venture capital which is really equity not debt.
i dont know how is the ipo priced but i would think it cant be that hig,any one wants to take a shot at how much??
posted on September 28, 2001 08:34:41 PM
All ebay has to do is go to a payment structure like half.com and the PayPirates will be left without a boat, or even a dingy for that mater.
posted on September 28, 2001 10:41:06 PM
This really looks like a desperation move to me. Paypal lost 27 million in its last quarter, which means the cash from the last round of venture capital investment -- eight months ago -- has all (or nearly all) burned away. I suppose the VCs don't want to put any more cash in, so IPO was the only choice. But just how long do they think $80 million in IPO funding will last?
If everyone who has been screwed over by Paypal buys one share of stock, I have a much better investment opportunity -- buy the video rights to the stockholder meetings. (Though Vince McMahon has probably already thought of this.)
posted on September 28, 2001 11:12:24 PM
27 million in the last quarter, I hadn't seen that. I guess that is why they have taken to double billing people that use their debit card. It's Twice as FUN to use PayPal now, if your really lucky we just might make it 3 or 4 times as fun.
If I was ebay right now I would be looking at processing all orders in house like they do with half.com. PayPal would be gone in about a week as soon as they realized that they waited too long to build something else like their own stores or auction site.
posted on September 29, 2001 03:02:23 AM
This looks to be one of the stupidest moves one could imagine. Why on earth would you go public with an income statement / balance sheet like that? In THIS economy?
Even if the numbers looked good, I wouldn't touch it with a 10 foot pole:
1) I don't think a credit card based transaction system (what PayPal largely is) will be the eventual winner. It will be an electronic check which transfers immediately for a cost of less than 25c. It's paid by the BUYER. It's also a "win-win", as it costs the seller nothing, it costs the buyer less than a stamp, and it's instantaneous (no need for "float" time with those). Unfortunately, there's not a ton of money in it for whatever bank sets it up (it will be just one of those nice "extras" they provide), but there will be such a demand IMHO that someone will.
2) eBay could snuff them out of business on a whim if they wanted to. All they'd need to do is (a) outlaw all 3rd party banners, or (b) make Billpoint free. Both are possibilities since they control the site & own Billpoint. They could look at "free Billpoint" as a "cost of doing business" or "competitive advantage".
My guess is that they will pull the IPO and it will never happen. I can't imagine anyone that would buy anything with hopes of getting even 10c on the dollar back. This is especially true for the users, who have been lied to & deceived repeatedly.
As an aside, it just shows you that if you think the fees are now "set", you're sadly mistaken. As I (and many others) have pointed out previously, there's NO WAY they can make money at the levels they're at. They will at least DOUBLE fees (probably more) in the future. If you're reliant on PayPal, I'd strongly recommend you start looking elsewhere, unless you don't mind paying 5%-8% plus $0.50 per transaction. That's where they'll end up, IPO or not.
[ edited by ebaypowersellergold on Sep 29, 2001 03:03 AM ]
posted on September 29, 2001 07:15:36 AM
funny back in the days of dotcom mania,no one asks if these companies make money??
27 million dollars loss on 19million dollars revenue,you have to breakdown the losses and see where they are coming from?
amortisation/depreciation are non cash items,they are considered tax shields by corporations,i would think there is a large amount of equipement depreciation expense in the losses,as fixed assets usually have life span of ?? X number of years.
they could also adopt different depreciation methods for financial versus tax reporting.
for software,there will be amortisation expense,but i believe business has to expense them all instead of capitalising it on balance sheet as an asset and slowly expensing them as software can eveaporates fast!!!!
my gut feeling is that they are holding their ground on the losses-that the losses are manageable and they see themselves being able to sustain until they turn corner in near future.
i wont be surprised if they are making a small profit right now on cashflow basis,that they have positive cashflow,no instutional investors will go for a dotcom finance company if they dont show good prospects.
why do they choose to go public now??
it is good publicity ,it fills the coffers and it may attract small businesses,i dont mean us sellers who run a business from our living room,i mean the brick and mortar type of businesses-retail,wholesale,distributor,university,church etc.
how do you know it is 80 million dollar IPO??
HOW MANY SHARES??
posted on September 29, 2001 07:28:43 AM
WILL EBAY ADOPTS HALF.COM METHODS OF PAYMENT??
DONT FORGET EBAY MOTORS INVOLVES 5 FIGURES TRANSACTION,MOST OF THESE TRANSACTIONS ARE CONDUCTED WITH CASHIER CHECKS OR BANK WIRETRANSFER.
posted on September 30, 2001 12:27:16 AM
I dont think now is a good time to invest in a company already losing tons of money and who are at the mercy of eBay.
I believe one of the articles mentions over 60% of their revenue is derived from eBay transactions.
Transactions which could be significantly curtailed with a simple eBay policy change like making their linking policies to 3rd parties in sellers listings more stringent. Something they've done several times in the past.
Makes me wonder why they're going public. I guess nobody wanted to fund them for another round so they'll try and sucker the public into it. They must be about ready to run out of money and are hoping for a public bailout that would keep them going a while longer. A lot of end users love PayPal and probably aren't quite intestor savy and will be buying.
[ edited by franko122 on Sep 30, 2001 12:29 AM ]
posted on September 30, 2001 08:50:17 AM
paypal has been tracking their debit card activities,i have been using their debit card for the last 2 weeks and i have received a phone call from them reporting that the card is working at USPS and albertson,and we know these are nationwide outfits.
adding new products will help to reduce its dependence on ebay auction payments.
one way of looking at an online service like paypal is its willingness to help us run a business from our living room,how many big corporations were there for us 2 years ago?
and how many of us have received 10 dollars referral fee from them??
posted on September 30, 2001 09:07:47 AM
PayPal lost 169 million on revenues of 14 million in 2000???? Nice balance sheet, maybe I'll go public myself, even though I didn't have revenues of 14 mil, I certainly didn't lose 169 mil...
posted on September 30, 2001 09:44:27 AM
It's a crap shoot. Yes the ipo could do well, but then it may also fall flat on its face. Yes their growth has been outstanding. But it's we that grew them to that size. We could easily find something new that we liked better and ditch paypal. It would drop as fast as it grew. Also Bank of Amercia is rumored to already have a similar system in place. It's just a matter whether they decide to launch or not. With their capital, they could blow away the competition.
posted on September 30, 2001 10:04:05 AM
posted on September 30, 2001 09:44:27 AM new
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It's a crap shoot. Yes the ipo could do well, but then it may also fall flat on its face. Yes their growth has been outstanding. But it's we that grew them to that size. We could easily find something new that we liked better and ditch paypal. It would drop as fast as it grew. Also Bank of Amercia is rumored to already have a similar system in place. It's just a matter whether they decide -------------------------------------
Big companies do not always fare well in guerilla warfare-remember AT & T and its pc division??
how about IBM and its internet strategy?
what ever happens to GM Saturn division??
Exxon office equpment division??
bank of america would have to come to ebay and pry away buyers and sellers,which is not easy -since it is free for buyers,they have no reason to switch from paypal and billpoint ,besides old dogs dont want to learn new trick,if there is no incentive to do so.
as for sellers,it is SHOW ME THE MONEY TIME,bank of america would have to offer more attractive rates .
