• Hot Stove Analysis

When was the last time you heard of a company doing something seven times larger than Amazon!?

Here’s a statistic that might surprise you…

Nearly 80% of the top 500 internet retailers use PayPal Checkout.

According to MoffettNathanson analyst Lisa Ellis, PayPal’s (Nasdaq: PYPL) online checkout market share is seven times larger than that of Amazon Pay, which is PayPal’s closest competitor.

It’s incredible to think there’s a company seven times larger than Amazon (Nasdaq: AMZN)!

But it’s true. PayPal’s checkout button accounts for 70% of its payment volume – and equates to 85% of its sales. No wonder Barron’s just said that PayPal’s payment service “dominates the web.”

Think about it from a practical standpoint…

Do you want to retype all your personal payment information every time you place an order from a different online retailer?

Heck no.

That’s why PayPal has such a unique first-mover advantage. The company offers a quick, hassle-free checkout process to more than 20 million merchant websites – including Walmart, Target and Best Buy.

It’s the safest, fastest and most trusted way to make digital intermediary payments on the web today. The more transactions processed by its 254 million active accounts, the higher PayPal’s sales.

Sure, if you’re buying something off Amazon, then you’re using Amazon’s processor. But if you’re buying something anywhere else, you’re most likely using PayPal Checkout. And the process is as simple as ever.

Mario Cibelli, manager of hedge fund Marathon Partners, just wrote in an email to Barron’s that “PayPal’s first-mover advantage and scale give it a tremendous advantage. Consumers do not need more than one digital wallet, and merchants aren’t going to offer an unlimited amount of payment options. PayPal seems particularly well positioned for off-Amazon mobile commerce.”

Since it spun off from eBay in July 2015, PayPal has gained 105% – more than doubling in price. Some investors might consider the shares expensive – as they currently trade at 30 times 12-month earnings. But if you think of PayPal’s June 2015 spinoff date as its unofficial IPO date – and consider that the shares have only doubled over the subsequent three years – you’ll realize (as we do) that you’re still getting an opportunity to move into PayPal very early in its life cycle.

Online buying is not slowing down anytime soon – and PayPal continues to lead the way in facilitating transactions. That’s why we consider PayPal a “Buy” on any significant dips.