PayPal goes shopping for a half-billion-dollar stake in Uber
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PayPal goes shopping for a half-billion-dollar stake in Uber

Online payments giant PayPal is planning to invest $500 million in Uber Technologies at its Initial Public Offering (IPO). This signals a major expansion for PayPal, which is looking to branch out into new areas where its payment tech can take hold, and gain massive international audiences fast. It’s also not the first move PayPal is making along this route, having pumped $750 million into Argentinian ecommerce titan MercadoLibre last month. As giants like Alphabet, Alibaba, and Amazon, corner global markets, a strategy like this is necessary to keep PayPal competitive.

PayPal’s share price has increased by 34% so far this year

30 04 paypal

Source: Yahoo Finance

PayPal is itself a global name, with availability in 200 regions and 25 currencies. That makes brands like Uber, which is operational in 60 countries and 400 cities, a great fit: Uber can benefit from a dedicated payment service that can support it in multiple territories (particularly if it attempts to build an “Superapp” that combines multiple services into a single platform). And PayPal can benefit from an enormous new client-base and significant repeat custom.

Ryan Gilbert, a partner at venture capital firm Propel Ventures, thinks PayPal is onto something. He said: “I don’t think you spend that kind of money unless it’s part of a global strategy to enable these new super-platforms. PayPal needs to step on the growth gas pedal and these investments will buy the company access to millions of global customers. While baseline payments products have revolved rapidly over the recent fintech investment cycle, customer acquisition strategies have not. I expect we will see similar investments in future.”

Disclosure

Dominion holds PayPal in its Global Trends Managed Fund.


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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.