Keep Your Eyes Glued To This Stock

Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

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, recent fourth 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 billion, registering a growth of 18% over last year. The top line was driven by growth in all the geographic regions and an increase in number of active users. Occasions such as Black Friday, Thanksgiving, and the peak winter season played an important role during the quarter.

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 year, as depicted by the chart below:

<img src="" />

EBAY Revenue Quarterly data by YCharts

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 (NYSE: NCR). However, eBay has shown the best growth in terms of return to investors, in comparison to its peers. Last year's stock price performance of some these players is shown in the chart below:

<img src="" />

EBAY data by YCharts

eBay is the strongest player, with a 73% 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.

The Takeaway

eBay is very active when it comes to innovation. Also, it has expanded its reach in 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 risks involved, I think eBay is the best option available. It is an all-round player delivering commendable performances each quarter.


justhimanshu has no position in any stocks mentioned. The Motley Fool recommends eBay. The Motley Fool owns shares of eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus