The widely anticipated initial public offering of PayPal Inc. was put on hold because of a patent infringement lawsuit. As a result, shares of the company — which were to be traded under the symbol PYPL — did not begin trading yesterday as planned.
It was unclear when the IPO would take place.
PayPal allows Internet users to make and accept online payments. Its service is probably best known as a way to make and accept payments on auction site eBay.
Technology firm CertCo Inc., New York, filed the suit in Delaware on Feb. 4.
PayPal, which filed for its IPO in the fall, had been planning to offer 5.4 million shares of stock. They were expected to begin trading at $12 to $14 each and raise $76 million.
Many were eyeing the PayPal IPO as an indicator of what other Internet companies that have delayed their IPOs could expect if they proceeded with their plans.
In a throwback to the late 1990s, PayPal lost $107.8 million last year on revenue of $105 million and has warned that it may not reach profitability. The company claims more than 12 million users and that they spend more than $10 million per day in about 200,000 daily transactions.
But PayPal, Palo Alto, CA, is considered a risky investment by many because it is heavily reliant on eBay transactions, and eBay considers PayPal a competitor to its own online transaction handling system.
PayPal has refused comment on the issue, citing quiet period restrictions.
