Facebook collaboration could give PayPal massive boost
According to analysts at MoffettNathanson, Facebook could bring millions of new users to PayPal if the two internet giants expand their partnership. In a note to investors last Thursday, the analysts described these two companies as “a match made in heaven” and said that further collaborations (on WhatsApp, Instagram, and Facebook Marketplace) could give PayPal a major boost. The analysts even said that a marketplace partnership alone could generate around $1.5 billion in incremental revenue for PayPal.
PayPal’s share price has appreciated by 14% so far this year
Source: Yahoo Finance
PayPal and Facebook’s partnership began in 2016, when PayPal payment service became usable through Facebook’s messenger app. It’s been a big boon for both companies, extending Facebook’s ecommerce business significantly and putting PayPal in front of millions more people. It’s been so successful, in fact, that analysts think more could be on the cards.
Analysts Lisa Ellis and Michael Nathanson wrote in the note: “It is quite likely that Facebook and PayPal announce a significant expansion of their partnership sometime in the coming months. Arguably, they need each other now more than ever. We roughly estimate that possible WhatsApp and Instagram partnerships could bring 40 to 60 million new users to PayPal’s network each, and the Marketplace partnership could generate on the order of about $1.5 billion of incremental revenue for PayPal.”
It is the sheer scale of Facebook’s platforms that make this possibility exciting for PayPal. The latter is incredibly secure and convenient, and its partnership with Messenger has shown that – when it’s offered in-app – PayPal is an enticing proposition. That strongly implies that the benefits from further collaboration would be noteworthy.
Putting some figures to the above sentiment, Ellis and Nathanson continued: “Even if only 5 percent of the 1.3 billion WhatsApp users are converted, PayPal would capture 65 million new users – a 28 percent growth in its base.”
Dominion holds PayPal in its Global Trends Ecommerce Fund.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.