Ellison touts PayPal and Coinbase as Fintech Revolutionaries, Challenging Wall Street Banks

Larry Ellison, a renowned investor, holds both PayPal and Coinbase in his portfolio. He believes PayPal will benefit from the shift towards mobile payments, while Coinbase's institutional exchange business for cryptocurrencies provides a steady fee income. Despite concerns about increased competition, Ellison sees PayPal as a potentially profitable investment due to its modest valuation and continued growth potential in the fintech industry.

PayPal and Coinbase: Unlocking the Digital Payments Revolution

Larry Ellison, the renowned co-founder of Oracle Corporation, has expressed his unwavering confidence in the digital payments sector and its potential to transform the financial landscape. In an interview with Barron's, Ellison elucidated his bullish outlook on PayPal, the venerable payment platform, and Coinbase, a prominent cryptocurrency exchange.

PayPal: Embracing the Shift to Mobile Payments

Ellison, who has been a long-time shareholder in PayPal, maintains an optimistic view of the company's future. He believes that PayPal's consistent performance and resilience amidst market fluctuations have positioned it as a leader in the burgeoning mobile payments industry.

As consumers increasingly shift away from traditional financial products offered by banks and credit-card companies, Ellison anticipates that digital-payments companies like PayPal will continue to reap the benefits. This trend, coupled with the rise of fintech businesses, has created a fertile environment for PayPal's growth.

Coinbase: The Nasdaq for Cryptocurrencies

Ellison expressed his admiration for Coinbase, highlighting its institutional exchange business as a catalyst for its profitability. He likened Coinbase's operations to that of the Nasdaq for cryptocurrencies, generating a steady stream of fee income from the trading of Bitcoin and other prominent cryptocurrencies.

Coinbase's recent quarterly profit, driven by the resurgence in Bitcoin prices, has solidified Ellison's belief in its long-term viability. Despite the recent surge in its share price, he emphasized that Coinbase remains a formidable competitor within the crypto ecosystem.

PayPal vs. Coinbase: Diversifying the Digital Payments Landscape

Ellison acknowledged the recent challenges faced by PayPal, particularly in light of growth concerns. However, he believes that PayPal's relatively modest valuation, compared to high-flying fintech stocks, presents an attractive opportunity for investors.

In contrast, Ellison acknowledged that Coinbase's inflated valuation might warrant caution. Nonetheless, he maintained his conviction in both companies and the broader fintech industry. He sees their success as a reflection of the ongoing disruption within the traditional financial services sector.

The Demise of Banks: Fintechs on the Rise

Ellison asserted that the traditional banking industry is witnessing a gradual erosion of its customer base, attributed to the rise of fintech companies. PayPal and Coinbase, in particular, are seen as major players in this shift, actively capturing market share from banks.

Wall Street analysts largely concur with Ellison's assessment. The consensus price target for Coinbase, as per FactSet, remains below its current market value, suggesting that its potential upside may be limited. PayPal, on the other hand, presents a more favorable investment opportunity, with a target price indicating a potential 10% premium.

Ellison's Enduring Optimism

Despite his substantial investments in traditional banks, Ellison remains steadfast in his belief in the disruptive power of fintech companies. He views PayPal and Coinbase as proxies for the ongoing shift in consumer behavior towards digital payments and alternative financial services.

Ellison concluded the interview by emphasizing the transformative potential of the financial system as it evolves beyond the traditional banking sector. He believes that PayPal and Coinbase, with their customer-centric approach and innovative products, are well-positioned to capitalize on this seismic shift.