In times of Covid-19, several companies are thriving, one of them is PayPal. With e-commerce being the main option when buying any good or even when hiring any service provider, many companies have found themselves switching from the typical brick and mortar business model to an e-commerce one to stay afloat and survive this pandemic.
In consequence, consumers who were scared of leaving their house and had the option to lower in-person transactions to gather and stock up all their essentials opted for digital payments.
As one of the big moguls in the digital payment world, PayPal has been leading the digital payment field during Covid-19 around the world since this pandemic began, for this reason, investors and analysts are agreeing that PayPal is a stock one must buy.
How PayPal Stock is increasing
PayPal, like any company, has better days than others, however, since its creation things were not always perfect for the payment app. Back during its first quarter, the company endured an 87% decrease in its net income and was forced to increase cash reserves by $237 M to cover all its losses. Additionally, its growth revenue was extremely slow, only around 12% and a 68% increase in tax rates when they acquire Honey Science.
However, after enduring all the aforementioned hardships things started to look better for PayPal stock in the second quarter. Right now there are 300 million active customers with 7.54 million new accounts opened just in April 2020. The total payment rose by 22% this month alone with a 20% increase in revenue.
One of the reasons PayPal’s success is happening is due to cashless payments are in.
PayPal custom made payment software solution announced that a new feature in its mobile app will allow customers to pay at stores, or any sort of businesses using QR Codes. Just by scanning the QR Code using your phone’s camera you already completed the purchase. This is one of the many features PayPal offer including payment gateways and processors, mobile payments, and online payments among others. The QR Code is just an initiative to bring all the digital payment experience in-store but through your mobile. PayPal is also thinking about launching a digital card with Google play and Samsung Pay. As cash starts to lose its “value”, 51% of US consumers said they are using cashless often or not at all since this Covid-19 pandemic started according to a survey conducted last April 2020 by MasterCard. Moreover, PayPal is extremely well-positioned and ready to disrupt any sort of traditional payment method consumers are used to utilize.
The outcome on PayPal Stock
Even though a lot of businesses are now open, we have to adjust to the “New Normal” and a lot of companies remain bleak and know the path is long and hard. However, apps like PayPal are becoming very important in the world just because they are touchless, consumers can pay almost anything if not anything without completely touch-free and this is one of the most wonderful inventions for these types of situations (pandemics). During this pandemic PayPal is a winner, some might ask if PayPal can maintain this lead, and how much will need to continue growing. To answer these questions Bullish Ellis stated that PayPal has about 30% market share of US, including online, travel, and even entertainment and media and it does not appear like it was mentioned above that the Covid-19 crisis affected the company at all. Recent data shows that PayPal is still the undisputed leader in the checkout buttons competition, with six times the penetration of its biggest competitor, Amazon Pay.
Apple Pay is also an “amazing competitor” according to Ellis and its international growth and expansion are worth watching. However, she repeated a buy rating and $160 price target on PayPal, when writing about the company’s checkout button dominance “Is a testament both to company strategy and the inexorable power of network effects in payments”.
Investors also noticed that PayPal’s shares are up more than 40% year to date regardless of the coronavirus, for example, PayPal stock rose 3.3% to a 150.81 while the Dow Jones Industrial Average was up to 0.7%. Moreover, the company let go of its full-year guidance after reporting earnings earlier in May 2020 and see that shares still rose.
It is time that providers realize that as we adjust to this post-COVID world, making online payments through PayPal or Venmo (also owned by PayPal) will become more common and the new norm.