PayPal is now bigger than all Wall Street banks except JP Morgan
- Published: 7th July 2020
PayPal, the fintech company started in 1998, is now bigger than all US banks except JP Morgan. This is an incredible feat for a company that had lower revenue and profits than most banks.
PayPal valuation jumps over most banks
PayPal stock price has jumped by more than 66% this year, bringing its total market capitalisation to more than $209 billion. This is lower than JP Morgan’s valuation of more than $282 billion. Bank of America, the second-biggest bank in the US is valued at about $199 billion.
Interestingly, by market capitalisation, PayPal is bigger than Goldman Sachs and Citigroup combined. The two Wall Street banks are valued at about $180 billion.
PayPal’s current valuation is mostly because of its growth. In 2019, the company had a revenue of $17.7 billion and net income of more than $3.6 billion. Goldman Sachs, on the other hand, had a total revenue of more than $34 billion and net income of more than $7 billion. The same is true with the other Wall Street banks.
However, PayPal revenue has been growing at a faster rate than the banks. In the most recent quarterly earnings, PayPal’s revenue grew by 12% while all banks reported huge losses because of provision of bad debt. Also, as we have written before, the company added more than 7 million customers in April alone.
PayPal not the only firm making moves
Meanwhile, PayPal is not the only firm outperforming the big banks. Square, the payment firm started in 2009, has seen its stock price rise by more than 104% this year. This has brought its market valuation to more than $55 billion, which is $14 billion below that of Goldman Sachs. Ironically, Square is a loss-making company that generated about $2.2 billion in 2019.
While Square started as a payment service for businesses, it has found a lot of success in consumer-to-consumer business. Its Cash App is among the most popular payment platforms in the United States.
Globally, payment companies have been among the biggest winners of the pandemic. In Brazil, Remessa Online has raised $20 million from investors while in the UK, TransferGo has raised $10 million. Other payment firms that have raised funds are Payfazz and Younited Credit.
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Crispus Nyaga is a full-time financial analyst and trader with more than 7 years in the industry. He has been fortunate to work for several fintech companies, mostly from Europe, Asia, and North America. His work is published in leading platforms like Seeking Alpha, Invezz, InvestingCube, Capital.com, and Marketwatch. Crispus operates from a private office in Nairobi.