EBay Inc expects revenue at its PayPal unit to double by 2013 as it sought on Thursday to cast itself as a reinvented company and an innovator at the center of e-commerce.
Shares of eBay, which over the past two years has been seeking to shed an image of an Internet has-been, jumped nearly 8 percent following the PayPal comments during an investor meeting at its San Jose, California, headquarters.
Chief Executive John Donahoe characterized eBay as leading a consumer-driven move to make e-commerce faster and more convenient. He said consumers already have a store in their pocket because of smartphones that allow them to surf the Internet, shop and pay in one go.
We're at an inflection point where tech-driven innovation is broadly shaping e-commerce and shifting consumer behavior. This shift is creating new global opportunities for our company, he said. We are driving the next generation of e-commerce.
PayPal mobile transactions are estimated to double to $2 billion in total payment volume this year, executives said. The company has already announced that mobile on marketplaces will double to $4 billion in gross merchandise volume this year.
EBay was the pioneer of the Web auction during the dotcom boom, but the novelty of its marketplaces business eventually waned and growth faltered. The company now highlights PayPal's momentum as it makes improvements to stabilize marketplaces, which connects buyers and sellers.
PayPal, which is used by 59 percent of the top 100 online merchants in the United States and 40 percent in Britain, is on track to gain market share of up to 24 percent by 2013, executives said.
PayPal's revenue is expected to reach $6 billion to $7 billion by 2013, PayPal President Scott Thompson said, from $3.4 billion in 2010 -- representing growth of 76 to 105 percent. PayPal revenue rose by 23 percent from 2009 to 2010.
The payments unit focuses on two different segments -- businesses and consumers. In the former category, PayPal's merchant services business will be larger in 2013 than all of PayPal's business today, the company said.
No one has the breadth and depth of our capabilities, said Thompson.
Pacific Crest analyst Steve Weinstein said the company shared some good ideas about how it will fit into the growth of e-commerce, but said the key was execution.
They showed how products will evolve and how they can add value, Weinstein said, adding: It's about execution and getting consumers to adopt it.
Despite promises of continued growth at PayPal, eBay investors are anxious to see stabilization and growth at the company's marketplaces site, which represents the bulk of revenue -- $5.7 billion in 2010.
I know the question that's on your mind: 'Can eBay compete in the U.S. market?' I believe we can, said Christopher Payne, vice president of Marketplaces North America.
Although eBay is making ongoing improvements, growth still lags that of overall e-commerce, which is dominated by main rival Amazon.com.
The company has worked to heighten trust and safety on its site while trying to update what many e-commerce experts have called the site's outdated search technology.
The majority of eBay's online buyers now make fixed-price purchases, which eBay says are more popular. The company has also been at the forefront of mobile applications, and consumers can use eBay's app and scan technology to compare prices on smartphones while shopping.
Improvements, along with a strengthening economy and more consumer confidence, helped eBay post better-than-expected profit in its most recent fourth quarter.
But lingering questions over the drag at marketplaces has kept eBay shares at about half the value of their all-time high in late 2004 despite improvements since 2009.
EBay is valued below other Silicon Valley tech giants, at 16.7 times estimated 2011 earnings. Google and Yahoo, meanwhile, are valued at 18 and 21.6 times forward-looking earnings, respectively.
EBay shares were up 7.5 percent at $34.33 on Thursday afternoon on the Nasdaq.
(Reporting by Alexandria Sage; Editing by Tim Dobbyn and Matthew Lewis)