PayPal's Intrinsic Value Closer to $70 Per Share, Cantor Fitzgerald Analysis Suggests

A sum-of-the-parts analysis by Cantor Fitzgerald suggests PayPal's intrinsic value could be approximately $70 per share, indicating a recent acquisition report may undervalue the payments giant. The firm's analysis follows media reports of a potential takeover bid for the company.

Sum-of-the-Parts Valuation

In a research note to clients on Thursday, Cantor Fitzgerald addressed recent reports from CNBC that a consortium including Stripe, Block, and Advent International was considering an offer to acquire PayPal for about $53 billion, or $60.50 per share. While stating it does not have independent confirmation of the bid, the firm questioned whether the reported amount would be sufficient to secure a deal.

To assess the company's value, Cantor analyst Ramsey El-Assal constructed a model based on the estimated earnings contributions from PayPal's core businesses:

• Venmo
• Branded payments
• Unbranded/Braintree processing
• Other peer-to-peer (P2P) services

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Using a peer-multiple-based, sum-of-the-parts methodology, the analysis concluded that an offer of approximately $70 per share might more accurately reflect PayPal's intrinsic value.

Potential Ecosystem Impact

Cantor also highlighted potential downstream effects on the broader payments industry should a transaction proceed, particularly with Stripe as a potential new owner. The firm noted that PayPal's business model currently relies on processing partners, such as Global Payments and Fiserv, which are direct competitors to Stripe.

Furthermore, the note pointed to existing partnerships for PayPal's credit and debit card products. Synchrony issues the PayPal Mastercard, while The Bancorp Bank handles the PayPal and Venmo debit cards. A change in ownership could impact these established relationships within the financial ecosystem.