An expanded Facebook (FB) and PayPal (PYPL) relationship is mutually beneficial and could be a game-changer for PayPal, according to MoffettNathanson.

“Facebook and PayPal are natural partners. They’re both successful internet disruptors focused on facilitating online commerce – Facebook through advertising, PayPal through payments,” analyst Lisa Ellis wrote in a note to clients on Thursday.

After a 13-year marriage, eBay (EBAY) and PayPal divorced in 2015. According to Ellis, a new relationship with a major tech, financial or payments company could benefit PayPal greatly. “[It] could create step-function growth in PayPal’s user base, merchant base, geographic footprint, or omni-channel capabilities, and are only possible now that PayPal is free of the constraints of the eBay relationship.”

As for Facebook, the tech giant has been under intense scrutiny as a result of misinformation and privacy concerns, and the stock has suffered as a consequence. Shares of Facebook have tanked more than 18% in 2018. Facebook needs a new narrative, and an expanded partnership with PayPal could get the company back in the good graces of investors, according to Ellis.

Despite all of the headwinds facing Facebook, Ellis explained that investors are ignoring the company’s e-commerce growth opportunities. “With over 6 million advertisers and 2.6 billion people using at least one of Facebook’s four leading products, they have the potential to develop a world leading eCommerce platform – but, given Facebook’s lack of in-house expertise, need a partner(s) to help,” Ellis argued.

Among those four-leading Facebook products is Instagram. The platform has been a force to be reckoned with this year, dethroning Snapchat (SNAP) as the most-used app by teens, according to a survey by Piper Jaffray.

Facebook and PayPal have had a partnership since 2016. Facebook users are able to use PayPal to shop on Facebook Messenger and Marketplace; however, Ellis outlined three possible expanded partnership scenarios between PayPal and Facebook.

The first option involves the integration of a payment function within WhatsApp. According to Ellis, in order to better compete with rival WeChat, allowing payments on WhatsApp will help drive user engagement. “Even if only 5% of the 1.3B WhatsApp users (whom do not overlap with PayPal) are converted, PayPal would capture 65M new users – a 28% growth in its base,” Ellis said.

Secondly, tapping into powerhouse Instagram would potentially be a smart move for PayPal. Instagram has around 1 billion users, and an expanded PayPal partnership with the platform will allow Instagram users to stay engaged on the platform and shop without leaving the app. “If only 5% of 0.8B Instagram users (who do not overlap with PayPal) are converted, PayPal would capture 40M new users – a 17% growth in its base. PayPal would also realize incremental payment processing volume and revenue from processing Instagram transactions.”

Lastly, Ellis argues that there could be a more aggressive partnership between PayPal and Facebook’s Marketplace. While currently there is a limited number of people that actually make transactions through Marketplace, an extended partnership with PayPal could help boost that number, according to Ellis.

“We believe the conditions are in place for Facebook and PayPal to pursue one or more of these partnership options over the next 6-12 months,” Ellis said.

PayPal shares were trading nearly 1% higher at $87.29 as of 12:11 p.m. ET on Thursday.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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