Following its global popularity, it’s no doubt that many people would want to know who owns PayPal. The company is listed on the U.S. stock exchange, meaning private institutions and investors own it. In 2002, eBay invested $1.5 billion in PayPal’s acquisition. However, eBay split off the firm in 2015, facilitating PayPal’s recognition as an independent company.
Max Levchin and Peter Thiel founded PayPal in 1998 under Confinity. The company would later merge with X.com, Elon Musk’s company, birthing PayPal. The company has played an instrumental role in businesses and individuals, enabling them to accept and send payments globally.
The firm generates revenue from currency conversions. It also charges businesses a fee to process payments via PayPal. Read on to understand the company’s ownership story.
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Top PayPal Individual Shareholders
Up to 20.64% of retail investors, more than 6% of PayPal Insiders, and over 70% of institutional shareholders own PayPal. The company’s individual shareholders are:
- Pierre M. Omidyar
The current value of Pierre’s PayPal shares is approximately $5.30 billion, based on a U.S. Securities and Exchange Commission (SEC) filing. Known as a philanthropist and technology entrepreneur, Pierre is also an astute software engineer who founded eBay and remained the chairman between 1998 and 2015. According to a recently released report, Pierre is ranked at number 220 among the richest people, whose net worth is $9 billion.
- Dan Schulman
Dan is the reigning President and CEO of PayPal. However, he has announced his intention to retire from the company at the end of 2023. Dan bought 26,065 PayPal shares in February 2023 at $76.1675 each, amounting to around $395,351 worth of investment. Dan had purchased around $1 million worth of PayPal’s stock in the same period the previous year. He did so even though the company had posted a poor earnings report.
Commenting on Dan’s move then, Ben Silverman, the research director at VerityData, said, “It’s certainly a positive to see him come back with a much larger purchase.” According to Ben, Dan had never sold his PayPal shares since December 2021. He said, “Since then, his equity exposure has not only increased due to his buying but also as the result of him retaining significant stock awards that vested over the past year.”
It is worth mentioning that PayPal insiders have not sold their shares since 2022. Previously, insider selling would occur every two months.
Top PayPal Institutional Shareholders
Some of PayPal’s leading institutional shareholders include:
- The Vanguard Group
The firm owns 8.4% of PayPal’s shares. Vanguard’s stake in PayPal was valued at $6.8 billion by December 2022. Besides owning 96 million shares in PayPal, Vanguard managed 96 million shareholder votes as of December 2022. Vanguard is among the most prominent asset managers globally. It manages people’s money via exchange-traded and mutual funds, while offering related financial planning and investing services. While the firm’s no actual owner concept separates it from other large asset managers, the ultimate decision power lies in the Vanguard insider’s hands. Vanguard has a massive influence over the most significant public companies.
- BlackRock
This firm owned 6.7% of PayPal’s shares by December 2022, with a market value of $5.4 billion. The company owned 76 million PayPal shares and regulated 76 million shareholder votes around the same time. BlackRock is one of the most prominent asset managers worldwide, managing up to $10 trillion worth of assets. The company also provides portfolio management software to other corporations and asset managers. BlackRock is publicly traded, with its largest shareholders being its competitors and themselves through active and passive funds. The company also owns shares in some publicly traded competitors and large firms.
- State Street Global Advisors (SSgA) Funds Management, Inc.
SSgA owns approximately 3.9% shares in PayPal. The company runs an investment management firm and offers advisory and portfolio management services to private funds, trusts, institutions, investment companies, charitable organizations, and individuals. The company serves customers globally.
- Comprehensive Financial Management
Comprehensive Financial Management (CFM) owns around 2.76% of PayPal shares. The multifamily company is located in Los Gatos, California, and was founded in 1986. CFM offers asset management and investment advisory services to its clients. An executive management team governs and manages the company’s assets.
- Geode Capital Management LLC
Geode Capital Management LLC owns 1.83% shares in PayPal. The structured asset management firm provides key beta exposures in various niche and equity asset classes. Geode offers clients a clear investment process aimed at risk-adjusted performance.
- Indication of Institutional Ownership on PayPal Holdings
Many companies gauge their performance based on local market estimations. This means they focus on institutions included in core indices. PayPal Holdings has institutional investors that hold a significant fraction of the firm’s stock.
This means the analysts working for those firms have analyzed and liked the stock. However, sometimes their views may be wrong. If many firms change their perception of stock simultaneously, the share price is likely to drop fast. As a result, analyzing PayPal Holding’s earnings history becomes critical. Even then, what matters is a company’s future performance. Institutional investors own more than 50% of PayPal, which can highly impact board decisions significantly.
Hedge funds have no ownership in PayPal. As seen above, The Vanguard Group, Inc currently holds the largest shares. A deeper evaluation of PayPal ownership details indicated that the leading 25 shareholders have less than half of the total shares. This means that a large percentage of smallholders have no majority shareholder.
Studying a company’s institutional ownership data is crucial. However, investors must also evaluate analyst sentiments to determine the state of their operations. There will always be various analysts discussing the stock. As a result, choosing their view on the future is critical.
- General Public Ownership
The general public holds 18% of PayPal shares. While this ownership size is considerable, it’s not sufficient enough to transform the company policy if the other large shareholders disagree with the decision.
PayPal’s Original Story
Initially, PayPal was founded as Confinity, a name derived from combining confidence and infinity. The money transfer service company processes payment for auction sites, online vendors, and other commercial users for a fee.
Max Levchin and Peter Thiel founded PayPal in 1998. The former, a Chicago-based but Ukrainian-born computer scientist, had previously established three startup companies. He later sold them to Microsoft for $100,000 before graduating from college.
As Max waited to close the deal, he was broke and took time to visit Silicon Valley. Here, he stayed at his friend’s place, confused about what he would do with his life. During that time, he attended Peter Thiel’s lecture at Stanford University. Besides being a political activist, philanthropist, and businessman, Peter was a genius.
Impressed, Max approached him and proposed a company to develop a library to encrypt licensable schemes. Peter was impressed with the idea and promised to invest seed money in the startup through his hedge fund. Max and Peter named the company Field Link.
Max later discovered a lack of demand for that level of security. Peter suggested the money storage idea, encouraging Max to develop “I owe you” (IOU, an informal document acknowledging debt), a cryptographically secure service. The service would be beamed from one user to the other through Palm’s inbuilt infrared ports. They named the company Confinity.
Later, Max announced that users wouldn’t need a palm (a personal digital assistant or a type of handheld gadget popularly known as a palmtop computer). This was because he synced the software with the web and email, enabling users to transfer money with or without a palm. The team named the product PayPal. Luke Nosek, a co-founder of PayPal, introduced the financial inducement idea to boost the company’s popularity.
Every sign-in would get $10 deposited in their PayPal account and an additional $10 bounty for each new user referred. During that time, eBay sellers needed a transaction completion system, and PayPal’s referral idea attracted them to the service. They linked it to their PayPal homepage, accelerating PayPal’s growth.
- Elon Musk’s Entry
PayPal encountered multiple competitors, such as X.com, PayMe, and Dotbank. The former, headed by Elon Musk, promoted a similar service. It went a notch higher by doubling the amount PayPal was offering new users, and constantly copied PayPal’s strategies and services. As a result, both X.com and PayPal suffered negative cash flow, pushing Peter Thiel (PayPal’s founder) to consider an initial public offering. The two companies merged in March 2000.
Peter became the chief financial officer, Musk the chairman, and Bill Harris, the company leader. However, the operations were not smooth. The merger faced significant challenges, with X.com’s button-down concept clashing with PayPal’s freewheeling concept. Bill and Thiel couldn’t agree. Later, Peter quit the company, but the challenges escalated, forcing Elon to organize a crisis meeting to replace Bill as the CEO.
Musk became the new CEO, and Peter returned as the chairman. The board would direct the new management team to solve the company’s cash flow challenges. Musk embarked on phasing out the PayPal brand to replace it with X.com. However, surveys revealed that X.com wasn’t popular with the public.
Max collaborated with his previous executive team to lead a PayPal rebellion, taking a petition to remove Musk from the board, failure of which they would quit the company. They succeeded when the council removed Musk as CEO. Peter was appointed interim CEO.
- PayPal’s IPO
As PayPal was nearing 200 million user accounts globally, Peter and Reid Hoffman, a board member, agreed to find a buyer, setting $600 million as the minimum price. They approached Yahoo and Google, but both firms denied it, sighting PayPal’s eBay reliance. Hoffman and Peter opted to prepare for an IPO.
Once they publicized the announcement, eBay approached them with a $400 million deal, saying: “We are going to make this offer once and then crush you, you should really take this offer.” However, Hoffman required more than $1 billion. Later, eBay quoted $850 as its final offer. PayPal didn’t accept the offer and instead went ahead with the IPO, valuing the company at $1.2 billion.
eBay later agreed to acquire PayPal for $1.5 billion, finalizing the deal in 2002. Hoffman, Max, and Peter pocketed $100 million collectively and left the company they had founded. Peter established Clarium Capital Management LLC, a hedge fund, and invested $750,000 in Facebook before joining the board. Hoffman became the co-founder of LinkedIn, while Max developed Slide, a widget maker that counts numerous installations of its photo slideshows.
How much is the PayPal Brand Worth?
PayPal has registered significant growth over the years, especially after the pandemic, which accelerated the company’s growth revenue-wise. PayPal’s net worth in early 2023 was $90 billion. The company’s total annual revenue in 2019 was $17.772 billion, with $2.459 billion in earnings. In 2020, this figure grew, generating $21.454 billion in total revenue. PayPal’s stock price was $91.63, with the amount hitting $308 in 2021.
PayPal’s total market capitalization in 2022 was $105.97 billion, with experts predicting an increase in the coming years. PayPal’s revenue for the September 30, 2022, quarter was $6.846 billion, while the annual income for the same period was $27.053 billion. In 2021, PayPal’s revenue was $25.371 billion; in 2020, the company generated $21.454 billion.
Net income for the September 30, 2022, quarter was $1.330 billion, while annual net income for the year was $2.299 billion. In 2020 and 2021, PayPal’s net income was $4.202 and $4.169 billion, respectively.
Conclusion
PayPal remains one of the most effective and popular online payment systems that help users send and receive money online safely and securely. The company has evolved over the years and conquered challenges to be where it is today. As we’ve learned, none of the founders owns shares in PayPal anymore. Today, the company’s largest shareholders are The Vanguard Group, an asset management company with an 8.4% share, and BlackRock, which owns a 6.7% stake. After leaving PayPal, the founders established other companies.