PayPal Holdings Inc (NASDAQ:PYPL) shares jumped as much as 11 percent in their highly anticipated return to the Nasdaq on Monday, valuing the company at about $52 billion.
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PayPal, spun off from eBay Inc (NASDAQ:EBAY), is widely expected to build partnerships with e-commerce rivals and try to seize market share from startups such as Stripe and Square and technology behemoth Apple Inc (NASDAQ:AAPL), which unveiled its own mobile payments service last year.
PayPal shares soared to $42.55 in early trading, up from Friday's close of $38.35 when the shares were trading on a "when issued" basis. EBay's stock fell as much as 4.7 percent, valuing the company at about $32 billion.
"PayPal is the gorilla among independent digital payment
service providers with more than 160 million active accounts, global scale and brand recognition," J.P. Morgan analysts said.
PayPal is also looking to compete with Western Union Co (NYSE:WU) and other money transfer companies. CEO Dan Shulman said he was looking to use PayPal's size to offer affordable financial services widely.
"It's clear that the potential for mobile technology to transform money extends beyond commerce. The vast majority of the world's 7 billion people lack access to even basic financial services," Schulman told Reuters.
PayPal was founded in the late 1990s by venture capitalist Peter Thiel, Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk and others. It went public in 2002 and was acquired by eBay soon after for $1.5 billion.
Bowing to pressure from activist investor Carl Icahn, eBay said last year it would split PayPal as this would give both companies more focus and flexibility.
The companies are not severing ties altogether. The companies have agreed that eBay won't cut the volume of transactions it channels through PayPal for the next five years.
Based on eBay shares outstanding as of June 1, about 1.22 billion PayPal shares were distributed to eBay shareholders.
BMO capital Markets analysts said they expected investors to value PayPal relative to Visa Inc (NYSE:V) and MasterCard Inc (NYSE:MA), but added that PayPal had a relatively low EBITDA margin profile of 27 percent - around half that of the two credit card giants.
Analysts added that PayPal faced a fight in the rapidly evolving mobile payments market.
"... User engagement is changing, and the competitive advantages PayPal enjoyed in the traditional online commerce channel do not necessarily carry over into the mobile and offline worlds, in our view," J.P. Morgan analysts said.
EBay said last week it would sell its enterprise business in a deal, leaving the company with its marketplace business, where it faces stiff competition from e-commerce companies such as Amazon.com Inc (NASDAQ:AMZN).
(Editing by Sayantani Ghosh and Rodney Joyce)