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PayPal's Gojek Investment to Boost Southeast Asia Presence

Zacks Equity Research
·3-min read

PayPal Holdings, Inc. PYPL is making all possible efforts to expand presence in the fast-growing digital payments market.

Reportedly, the payment processor company and Facebook (FB) have invested in Gojek, which is an Indonesia-based ride-hailing services company. In addition to ride hailing services, Gojek offers online payments, food delivery, and other on-demand services like medicine, grocery delivery and courier facilities.

The terms of the deal, including the investment amount or any other details, have not yet been disclosed.

The investment will help PayPal further expand and grow in Indonesia, which is one of the emerging markets of Southeast Asia due to rapid Internet usage penetration.

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PayPal stated, “This new relationship is another positive step in our journey towards becoming the worldwide payments partner of choice, and helping to fuel global commerce by connecting the world''s leading marketplaces and payment networks".

Coming to Facebook, the investment will offer the company a strong entry in Indonesia. The investment is in line with the company’s strategy of bringing small businesses and their customers in the digital economy.

PayPal Holdings, Inc. Price and Consensus

 

PayPal Holdings, Inc. Price and Consensus
PayPal Holdings, Inc. Price and Consensus

PayPal Holdings, Inc. price-consensus-chart | PayPal Holdings, Inc. Quote

Indonesian Digital Payment Space Holds Promise

Per a report from Statista, total transaction value in the Digital Payments segment in Indonesia will amount to US$35.5 billion in 2020. Further, the total transaction value is likely to reach $63.7 billion by 2024 at a CAGR of 15.7% between 2020 and 2024.

PayPal will be able to expand in this market by investing in the widely popular and efficient, Gojek.

According to an analyst, Meng Liu, from market research firm Forrester, “The payment sector is still underserviced and the opportunity in Southeast Asia’s emerging markets like Indonesia is worth billions of dollars.”

Following the investment, PayPal’s will have to compete against Alibaba BABA, Alphabet GOOGL, JD.com JD and Tencent, which have already invested in Gojek in an attempt to reap benefits from this promising market.

Strengthening Asian Footprint

Although this industry is becoming highly competitive, PayPal is gearing up to make its mark in the fast-growing digital payment space. The company’s latest investment is expected to strengthen presence in Southeast Asian countries.

As emerging countries hold immense growth potential driven by improving proliferation of smartphones and Internet, we believe growing investment activities of PayPal in Southeast Asia are likely to yield good returns in the long run.

Also, PayPal continues to ride on partnerships and mobile centrism. The company’s ongoing strategic partnerships provide enhanced consumer choice, point of sale acceptance, instant money withdrawal facility and data quality.

We believe the continuous rise in demand for mobile payment solutions will help PayPal grow and expand internationally.

Zacks Rank

PayPal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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