PayPal Holdings, Inc.PYPL recently announced that it has successfully closed the acquisition of a payout platform, Hyperwallet, for approximately $400 million.
Hyperwallet is a payout platform with operations worldwide. It provides integrated payment solutions to enterprises, marketplaces, e-commerce and on-demand platforms.
The deal will likely give PayPal an access to more than 200 markets, further enhancing its payment distribution capabilities. In addition, the buyout will expand its payment solutions to marketplaces and e-commerce companies, making the payment process smoother and hassle free.
Following the closure of the deal, Hyperwallet's CEO, Brent Warrington, will join PayPal and continue to lead Hyperwallet.
Coming to price performance, shares of PayPal have returned 15.5% on a year-to-date basis, outperforming the industry 's growth of 3.9%.
E-Commerce Market Holds Promise
E-commerce has gained immense popularity in today's fast moving world. It will continue to gain traction in the long haul as well, with the increased penetration of internet and mobile phones. The e-commerce market has resulted in the emergence of online payment services and apps.
With the robust payout platform of Hyperwallet, PayPal has made its foray into the global e-commerce market that holds great potential.
According to data from Statista, revenues in this sector are expected to hit $1.7 trillion in 2018 and $2.5 trillion in 2022, and likely to witness a CAGR of 9.6% between 2018 and 2022.
Per latest report from Technavio, the global e-commerce payment market is expected to generate $135 billion by 2022.
We believe that PayPal is well poised to leverage the e-commerce sector's growth potential, with strong payment solutions.
Over the past few years, acquisitions have played a significant role in shaping PayPal's growth trajectory by adding strength to its product portfolio.
The latest deal bodes well for the company's strong efforts toward expansion of product portfolio.
The latest acquisition will expand and enhance PayPal's payment offerings on a global basis, which is likely to attract more merchants to its platform. This will also improve the merchant base of the company, in turn aiding top-line growth in the long haul.
Consequently, PayPal's strategic acquisitions along with well-performing payment platforms, namely Braintree, Venmo and Xoom, will continue to support it in gaining momentum in this rapidly growing market.
PayPal Holdings, Inc. Price and Consensus
Zacks Rank & Other Key Picks
Currently, PayPal flaunts a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include boohoo group plc BHOOY , QuinStreet, Inc. QNST and AMETEK, Inc. AME , each carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Long-term earnings growth rate for boohoo group, QuinStreet and AMETEK is currently pegged at 25%, 25% and 11.18%, respectively.
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