Here's Why PayPal 'Must Gain' 50% Incremental E-Commerce Dollars

While expressing concern over the competitive landscape for Paypal Holdings Inc PYPL, Pacific Crest’s Josh Beck said in a report that the company’s positive near-term momentum was balanced by mid-term risks. The analyst maintained a Sector Weight for the company.

This Is A Must For PayPal

Analyst Josh Beck said that the company must gain ~50 percent of incremental ecommerce dollars. He wrote, “According to our global e-commerce market analysis, excluding China, PayPal must go from ~20% market share in 2014 (i.e., one in five checkout dollars) to ~33% by 2018 (i.e., one in three checkout dollars).”

PayPal is estimated to have gained ~45 percent of incremental e-commerce dollars, excluding currency impact. The company gained a low single-digit percentage share of the global ecommerce market in 2015, “benefiting from ubiquity and significant scale, a trend we expect to persist in the near term,” Beck mentioned.

Over the next couple of years, PayPal merchant services could capture ~50 percent of the incremental global ecommerce dollars, excluding China.

The analyst commented that gaining ~50 percent of incremental ecommerce dollars would require “sustained execution.” He added that in case a competitor gained traction, PayPal’s total payment volume [TPV] growth could be at risk.