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eBay: PayPal profits


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by Geoffrey Seiler, editor BullMarket.com

eBay (EBAY) recently revealed new PayPal technology to more than 100 large retailers; PayPal continues to be the engine of eBay's growth.

PayPal users will be able to pay for goods via PayPal in several different ways. One way will be through a physical card that they can swipe just like a credit card.

Another way will be to enter their cell phone number at a merchant terminal, or by waving their phones near the terminals.

The PayPal technology will also allow users to identify themselves when they walk into a store via their mobile phones, allowing retailers to send them discount offers that will then be deducted at checkout if they use their PayPal account.


After making a purchase, shoppers would also be allowed to change their method of payment. For example, they could put the purchase on a debit card instead of a credit card.

They could also split up the payment method, and put part of the purchase on a credit card and the rest via a debit card or bank payment. All receipts would also be stored within PayPal.

Payment volume and revenue growth for PayPal are both up more than 30% year over year for the unit last quarter.

While impressive, the future opportunities of also going offline and opportunities in Asia are even more exciting, and provide a long runway for growth over the next several years.

Trading at just above 11x the 2012 consensus of $2.32, excluding its net cash, investments, and Skype proceeds ($4.39 per share), eBay is a "Buy." Our target is $41.


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