The recent departures of PayPal’s (NASDAQ: PYPL) Chief Operating Officer Bill Ready alongside a slew of other top management team officials is seen by experts on Wall Street as a warning sign for the company’s future.
One analyst went on to say on Wednesday that the loss of this senior executive, who is considered to be among the best COO’s in America, will lead to a ‘brain drain’ in the company that could mark the beginning of a slow decline despite strong fundamentals.
Guggenheim analyst Jeff Cantwell wrote in a note that Bill Ready, who oversaw the company’s consumer businesses alongside its engineering, technology, and product teams, was “instrumental for PayPal, overseeing rapid growth in several of the company’s highest- profile businesses” and “one of the best COOs in the industry” that could have succeeded current CEO Dan Schulman had he stayed in the company.
This latest departure is just one in a series of alarming losses for the senior management team at PayPal. This includes Gary Marino, the company’s chief commercial officer, Mike Vaughan, COO of its Venmo unit, and Juan Benitez, general manager of its Braintree payment systems.
While Cantwell does say that this isn’t likely to hit the stock in the short term, he warns that the senior management ‘brain drain’ will severely hurt the company in the years to come.
The loss of so many key executives to PayPal comes at what could be a potentially crucial time, as Facebook’s newest cryptocurrency, Libra, would essentially act as a payment system that’s a lot closer to a tradition web-commerce platform such as PayPal and Stripe. This could give the company some potential competition as some users might migrate over to using Libra.
Despite the loss of several management officials as well as some potential competition, PayPal remains well poised for future growth over the coming years. Revenue increased by 12 percent year-over-year in the first quarter, which the company now having 277 million customer accounts, a further 17 percent increase from the same time last year.
At the same time, the U.S. person-to-person (P2P) market is expected to grow from $188 billion to $244 billion by 2014, and PayPal’s Venmo app currently has over 40 million active accounts. The increase in the market will end up helping Venmo’s revenues, with PayPal having recently said that the app has an annual revenue run rate of around $300 million.
Shares of PayPal didn’t move much in response to this departure as the stock inched up 0.4 percent on Wednesday to $116.64. So far, PayPal is up 39 percent in the year, in comparison to the 18.6 percent for the S&P 500 as a whole. While most analysts are still positive on the stock, some have begun to voice concerns as top management positions continue to open up amidst these departures.
PayPal Company Profile
PayPal provides electronic payment solutions to merchants and consumers. The company’s digital wallet securely and conveniently stores customer account data. PayPal also facilitates payment processing for merchants. The company earns revenue through transaction fees and by providing a variety of other financial services, including lending. – Warrior Trading News