UK 20:57 Wednesday, 23 September 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Optimal Payments (OPAY) - of Equities First Holdings LLC infamy (see HERE) – has announced a proposed purportedly “transformational and value enhancing” $1.2 billion acquisition of Skrill Group - described as “one of Europe's leading digital payments businesses providing digital wallet solutions and online payment processing capabilities and is one of the largest pre-paid online voucher providers in Europe with its paysafecard brand”. Does this though transform the investment proposition here? …
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Comments
ben williams
I note you have made no mention of the $40m of cost savings in year one, nor of the 40p earnings forecast for 2016 which both Barclays and Numis have made.
Daniel Victor
Far too much hype for me,here,although I might be tempted were there a serious dip.
Tom Gilbert
You seem to be forgetting your golden rule – profits are a matter of opinion, cash is a matter of fact. Just look at the prodigious cash generation and pace at which they pay down debt. The most negative thing I can think of about this (apart from the ill-advised involvement with EFH) is how much they go on about their own share price. You appear to be being contrarian for the sake of it. No real analysis offered.
Burton Lazars
Hi Steve
I think you are right to be cautious as there are too many unknowns, however you have changed your closing line in this article from saying that people buying at 550 need their heads examining, to simply calling it a bargepole. Are you now saying that it is uninvestable at any price, or just at 550?
Burton
alcira16247
Steve
Thanks for highlighting some very interesting points.
There’s a number of good reasons why Optimal Payments are trading at a significant discount to its peers, not least is the somewhat tarnished image of the CEO and the scandalous First Equities payouts, together with its propensity for issuing ambiguous, if not downright misleading statements.
Look also at the rather large customer and employee negative comments and complaints, on-line, about the company and its principal neteller operation.
The payment processing industry is absolutely teeming with competitors, that include many world-class companies, soon to be joined by the grand-daddy of them all……. PayPal!
Led by Dan Schulman — freshly plucked from his position as president of the Enterprise Growth group at American Express, PayPal is … the most trusted digital wallet, with more than 152 million active registered accounts, processing one in every six dollars spent on-line.
A hugely indebted Optimal Payments or PayPal? I know where my few quid will be going!
Jane
Steve, I think you’ll find that the price being paid for Skrill is quite a bit more than an EV/EBITDA of 13.5, given the movement in the €/£ exchange rate since last September. Btw, according to Stockopedia, OPAY are now, after the rise in the SP yesterday, on an EV/EBITDA of 18.4 and PER’s of 20.0 for FY14 and 16.6 for FY15. They do seem to have paid a full, if not overfull, price for Skrill and the business now seems to be fully priced, imo. Besides that, they are now into the fast-evolving mobile wallet territory where you’ll find the big beasts such as PayPal, Apple (with Apple Pay), perhaps Samsung and with the mobile wallet market perhaps moving to embedded manufacturer applications. Their strategy seems unclear, apart from this being a defensive move to swallow up their main European competitor. The wild card is the US online gambling market where Neteller has legacy strength but surely those big beasts will themselves be eyeing that market as well? I’ve made money on OPAY but am now far more cautious, besides (I must say this) having less confidence in the CEO after the EFH business.
All IMHO, DYOR.
Jane
Alcira,16247:
Dan Schulman will certainly be motivated at PayPal:
“eBay, which is spinning off its PayPal division later this year, plans to pay each of the two new companies’ chief executive officers $14M in total compensation after the split. Dan Schulman, who joined the company from American Express, will be CEO of PayPal, while Devin Wenig, who is now president of the Marketplaces division, will become CEO of eBay (NASDAQ:EBAY). They will both get an annual salary of $1M post-breakup, plus cash bonuses and equity awards of as much as $13M.”
From seeking alpha, “Wall Street Breakfast”, today.