Can PayPal Pull This Off?

In an Internet market starved for success stories, PayPal (PAPXX ) is one of the few upstarts brimming with potential. Still, the Palo Alto (Calif.) company, which handles payments for buyers and sellers on the sites of auctioneer eBay Inc. (EBAY ) and other e-commerce players, left the high-tech world agape when it filed paperwork on Sept. 28 for an $80 million initial public offering. The move came just 17 days after hijacked jetliners crumbled the World Trade Center towers and knifed into the Pentagon, killing thousands and pretty much guaranteeing a U.S. recession. Investors are so skittish that not a single company went public in September, the first month without an IPO since Gerald Ford was in the Oval Office.

What gives? PayPal Inc. can't offer a public explanation because of the Securities & Exchange Commission-mandated quiet period for pre-IPO companies. However, interviews with analysts and investment bankers, and an examination of the company's IPO paperwork, shed some light. PayPal isn't desperate for cash. The company boasts $135 million in cash and short-term investments as of June 30--enough to fund the company for two more years.