PayPal shares surge on report of potential fintech acquisition

Stripe moves to pursue M&A

PayPal jumps 6.7% on takeover hopes

U.S. fintech startup Stripe is reportedly pursuing an acquisition of PayPal Holdings. On the news, PayPal shares rallied sharply on the day.

On the 24th (local time), Bloomberg, citing sources, reported that Stripe is considering acquiring all of PayPal or certain assets. The source said discussions are still at an early stage.

Founded by brothers Patrick and John Collison, Stripe has been growing rapidly on the back of developer-friendly payments infrastructure. Total payment volume last year reached $1.9 trillion, up 34% from a year earlier. The company said its valuation stands at $159 billion.

Founded in the 1990s, PayPal once led the digital payments industry but has struggled in recent years. Competition has intensified as big tech companies such as Apple and Alphabet have entered the easy-payments market, eroding its competitiveness. Its fourth-quarter results last year also missed market expectations. Fourth-quarter revenue came in at $8.676 billion, below the market forecast of $8.8 billion. The stock is down 33.8% over the past year.

In a recent interview, Stripe President John Collison said, “The market environment has changed significantly as a variety of services such as Apple Pay and Google Pay have emerged,” adding, “I can’t answer questions related to M&A, but it is clear that PayPal is going through a difficult period.”

On takeover expectations, PayPal shares closed up 6.7% at $47.02. Market capitalization stood at $43.3 billion.

By Han Myung-hyun wise@hankyung.com