In the era of continuous innovation there are constant improvements in technology. The emergence of smartphones has thrown up a large number of ways for companies to grow. One such industry is the M-commerce industry, which has opened up a lot of opportunities for electronic payment providers. People find it extremely easy to shop and make payments through their phones, and hence the need for these providers.
eBay (NASDAQ:EBAY) is one such player that has been truly enjoying the benefits of this new development. Its mobile payment solution, called PayPal, has been very successful. It has been posting great results, driving eBay’s performance north. In fact, its first quarter results also highlighted the growing importance of PayPal and other efforts of eBay. Let us look into the details.
The Key Drivers…
Amazing initiatives taken by the company and customers’ growing mobile engagement drove revenue to $4.3 billion, registering a growth of 14% over last year. The top line was driven by growth in all the geographic regions and an increase in commerce volume growth of 24%. Occasions such as Black Friday, Thanksgiving, and the peak winter season played an important role during the quarter.
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- EBAY 15-Year Financial Data
- The intrinsic value of EBAY
- Peter Lynch Chart of EBAY
However, this is not the first time that eBay has performed amazingly well and surpassed analysts’ estimates. The payment provider’s revenue has been increasing continuously over the last five years, resulting in an increase of 103.1%. On the other hand, peer NCR Corporation (NYSE:NCR) registered a growth of 35.1% only, during the same period.
PayPal has played a very important part in eBay’s performance. Growing acceptance of mobile payment systems has benefited not only eBay, but also its industry peers such as VeriFone Systems (NYSE:PAY) and NCR Corporation. However, eBay has shown great growth in terms of return to investors, in comparison to its peers. Five year stock price performance of NCR and eBay is 187.0% and 174.3%, respectively.
eBay is a stronger player, with a 187% jump in its stock price. Though peers such as VeriFone have also been formulating strategies to combat competition and attract customers, its efforts are not up to the mark. It has recently launched SAIL, a payment processing system for small businesses. The system looks like a good move since it uses social media and many promotional offers to lure customers. Its customer loyalty program can also prove to be effective.
However, VeriFone will be facing stiff competition from eBay’s PayPal Here, which caters to the same market and is already available in some Home Depot’s stores.
NCR Corporation, on the other hand, has been much less active on the innovation front. Nonetheless, it has been picking up the pace recently. It has recently announced its partnership with PayPal, which will help PayPal to expand its physical presence. NCR’s mobile solutions and retail footprint, coupled with PayPal’s technology, will help customers discover a convenient payment system. Growth of PayPal will also help NCR witness growth.
eBay is very active when it comes to innovation. Also, it has expanded its reach into emerging markets. PayPal’s international expansion will beget huge benefits to the M-commerce company. Moreover, the company has also been a prominent online seller, offering the best deals, delivered in the shortest span of time. If you are willing to bet on these technological advancements with the least risk involved, I think eBay is the best option available. It is an all-round player delivering commendable performances each quarter.