eBay’s (NASDAQ:EBAY) PayPal recently partnered with Discover (NYSE:DFS) to launch a service called Discover Money Messenger [1] that lets Discover cardholders send money from their mobile phone or computer to anyone with a mobile number or email address. PayPal and Discover compete with Visa (NYSE:V), American Express (NYSE:AXP) and private companies such as Square that offer innovative payment services (or aim to) in place of cash and checks.
This could provide notable upside to eBay, as PayPal represents over 20% of eBay’s stock value by our estimates. Our price estimate for eBay stock, at $32.81, is roughly 5% above market price.
Under the service, the person receiving the money must use a PayPal account. Accordingly, this should spark an increase in PayPal signups and also raise the frequency of payments processed per account. You can drag the trend line in the interactive chart below to see how an increase in PayPal accounts could affect eBay’s stock value.
This service could, however, reduce average payment size on PayPal, since it is aimed at replacing cash for making small payments.
See our complete analysis for eBay stock here
Notes:
