eBay Could Benefit From PayPal's Growth

Trefis members see an uptick in eBay's stock from PayPal's growing business.
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We estimate the continued growth of PayPal's business, which accounts for around 18% of eBay's stock, will lift

eBay

's

(EBAY) - Get Report

stock.

Trefis members have created forecasts for two key drivers of eBay's stock over the last week: (1) Number of Accounts on PayPal and (2) Payments per Account on PayPal. eBay competes with

Amazon

(AMZN) - Get Report

in the online commerce business.

The member forecasts suggest that Number of Accounts on PayPal will trend in line, while Payments per Account on PayPal will trend slightly above the estimates of the in-house team of analysts at Trefis. These projections indicate a combined upside of 2% for eBay's stock.

We currently have a Trefis price estimate of around $30 for eBay's stock, about 31% above the current market price of close to $23. eBay's stock is quite sensitive to (1) Number of Accounts on PayPal and (2) Payments per Account on PayPal. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.

The average of Trefis member forecasts for Number of Accounts on PayPal indicate an increase from around 90 million in 2010 to 200 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 93 million in 2010 to around 215 million by the end of the Trefis forecast period.

The member estimates imply a downside of 2% to the Trefis price estimate for eBay's stock. In the past, Number of Accounts on PayPal has increased from around 10 million in 2003 to 77 million in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of eBay's stock to Number of Accounts on PayPal.

Payments per Account on PayPal represents the number of transactions per PayPal user per month. The average of Trefis member forecasts for Payments per Account on PayPal indicate an increase from 1.2 per month in 2010 to 1.4 per month by 2016, compared to the flat baseline Trefis estimate of 1.2 per month over the Trefis forecast period.

The member estimates imply an upside of 4% to the Trefis price estimate for eBay's stock. In the past, Payments per Account on PayPal has decreased from 1.8 per month in 2003 to 1.2 per month in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of eBay's stock to Payments per Account on PayPal.

Our

complete analysis for eBay's stock is here

.

Note: Trefis Members constitute more than tens of thousands of users of the Trefis platform, and include investors, financial analysts, and business professionals who use the Trefis platform to create their own models and price estimates.

Trefis

is a financial community structured around trends, forecasts and insights related to some of the most popular stocks in the U.S.