Weekend Update - W2629
About this episode
The episode discusses contrasting market evaluations of PayPal, highlighting the differences between public and private investment perspectives.
▶ Explore this week’s Tape — live, sortable, drill-down → Wall Street Called PayPal Dead Money for Two Years. This Week, Private Capital Sent a Term Sheet. Two markets looked at the same cash flows this week and reached opposite verdicts. The public market has spent two years pricing PayPal, Comcast, and half the telecom block as value traps — cheap for a reason, and the reason is they’re dying. Then Stripe and the private-equity firm Advent put fifty-three billion dollars on the table for PayPal at a twenty-eight percent premium, and PayPal’s own board came back and said the number was too low. ¹ ² Only one of those two verdicts arrives with committed financing attached. The tell isn’t the premium. It’s what the premium is buying. Start with the balance sheet, because that’s where the buyer started. PayPal carries almost no debt and throws off something close to a sixteen percent free cash flow yield.³ To a public shareholder, that yield is a warning — the market’s way of saying the branded-checkout business is in slow decline and the multiple should stay buried. To a private buyer, the exact same yield is fuel. A clean balance sheet generating that much cash finances its own…
Topics covered
- private equity
- public market
- cash flow
- buyout strategy
- investment analysis
Keywords
- PayPal
- Advent
- buyout
- cash flow yield
- public market
- private equity
- investment
Mentioned in this episode
Organizations: PayPal, Comcast, Advent, Stripe, Wall Street
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