eBay Could Benefit from Growing PayPal Biz

by Trefis Team
+28.36%
Upside
52.14
Market
66.93
Trefis
EBAY
eBay
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We estimate PayPal accounts for around 18% of eBay’s stock, and growing PayPal business will lift eBay’s stock up. Trefis members have created forecasts for two key drivers of eBay’s (NASDAQ:EBAY) stock over the last week: (1) Number of Accounts on PayPal and (2) Payments per Account on PayPal.  eBay competes with Amazon (NASDAQ:AMZN) in the online commerce business.

The member forecasts suggest that Number of Accounts on PayPal will trend in line, while Payments per Account on PayPal will trend slightly above the estimates of the in-house team of analysts at Trefis. These projections indicate a combined upside of 2% for eBay’s stock.

We currently have a Trefis price estimate of around $30 for eBay’s stock, about 31% above the current market price of close to $23. eBay’s stock is quite sensitive to (1) Number of Accounts on PayPal and (2) Payments per Account on PayPal. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.

1. Number of Accounts on PayPal

The average of Trefis member forecasts for Number of Accounts on PayPal indicate an increase from around 90 million in 2010 to 200 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 93 million in 2010 to around 215 million by the end of the Trefis forecast period. The member estimates imply a downside of 2% to the Trefis price estimate for eBay’s stock. In the past, Number of Accounts on PayPal has increased from around 10 million in 2003 to 77 million in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of eBay’s stock to Number of Accounts on PayPal.

Our complete analysis for Number of Accounts on PayPal is here.

2. Payments per Account on PayPal

Payments per Account on PayPal represents the number of transactions per Paypal user per month. The average of Trefis member forecasts for Payments per Account on PayPal indicate an increase from 1.2 per month in 2010 to 1.4 per month by 2016, compared to the flat baseline Trefis estimate of 1.2 per month over the Trefis forecast period. The member estimates imply an upside of 4% to the Trefis price estimate for eBay’s stock. In the past, Payments per Account on PayPal has decreased from 1.8 per month in 2003 to 1.2 per month in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of eBay’s stock to Payments per Account on PayPal.

Our complete analysis for eBay’s stock is here.

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