Who Wants A PayPal IPO?
from the e-fish-out-of-e-water dept
Amazing, but true. It looks as though PayPal might actually go through with their IPO this week. It seems that everyone in the internet world is watching this one carefully to see if it goes anywhere. It has all the hallmarks of a dot com issue from years past: it’s an internet only business, revenue has been growing – but just as quickly as their losses pile up. A few years ago this would have been a huge IPO, but today people just aren’t sure. I’m still surprised that someone didn’t just buy them up. I think, as part of a larger offering, it could make sense – but it’s not clear how profitable the company will be on its own. They’re going to have to keep adding in various fees and such, and every time they do, they’re opening up more room for larger, more well financed, competitors to take some of their market. Of course, since when have fundamental business principals had anything to do with how well a company performs in its IPO?
Comments on “Who Wants A PayPal IPO?”
See It Coming
Here’s the biggest warning sign, excerpted from the Wired article:
Despite the fact that it looks like an e-fish out of water, Fitzgibbon predicts that PayPal will see some small gains in first-day trading. He attributes this forecast less to the fundamentals of the company than to the assumption that the investment banks underwriting the offering, led by Salomon Smith Barney, have done their research.
Uh, I hate to break the news to John Fitzgibbon, editor if IPOdesktop (whatever that is), but investment bankers underwrite IPOs when they smell a buck, not when the company is any good. Hasn’t everybody learned that one yet. The main “research” I would expect is being done at SSB is to determine whether there are enough “greater fools” out there to buy into this.
No Subject Given
The problem for PayPal in getting bought is that the they have no defensible position. Their technology and model are easy to replicate, and a bank can do it much more efficiently on their own. In fact, Citibank already has a service that is cheaper…
Re: No Subject Given
It’s not the technology and the model that they would be buying, but the large number of customers already signed up for PayPal… Sorry. Should have made that clearer.
While there are cheaper services, none has been nearly as successful as PayPal in getting customers to sign up. Buying PayPal gets all of those customers in one shot.
Re: Re: No Subject Given
There are a lot of people signed up for PayPal, without a doubt. However, I’ll place my bets on Citi (with all their credit card holders) or BofA (with all of their bank acct. holders) over PayPal, which has no consistent billing/statement relationship with the vast majority of their ‘customers’….
Re: Re: Re: No Subject Given
True. I’m not saying that PayPal’s advantage in customers is sustainable… I’m just saying that it’s a way for some other company to get a jumpstart – which they could then tie into other ways to hold onto the customer. So… for example, if Yahoo wanted to jumpstart PayDirect over Citi’s service… that’s a way to do it. Or, if another bank that wasn’t yet offering such a service wanted to jump into the thick of things.
I just think that now would be the time for PayPal to sell out simply because their advantage isn’t sustainable in the long run, but could be very helpful for a larger company right now – to bring in the customers which they could hopefully keep through their other services.
Re: Re: Re:2 No Subject Given
Agreed on that…they’re doomed, long term. I just can’t figure out who would buy them that could afford them at this point. I think Yahoo! just fired their shot by buying the job site, and I can’t imagine a bank buying them. Then again, I’ve seen crazier things happen…
Re: Re: Re:3 No Subject Given
blah blah blah, pointdexters.
1) make arbitrarty company
2) do IPO
3) cash out your shares
4) golf till death
Re: Re: Re:4 No Subject Given
Just make sure you can outwait the tie-up period for selling.