![]() ![]() With the potential for some lost eBay revenue, Venmo represents the next big growth avenue for PayPal, which just posted a record quarter as the COVID-19 crisis drove surging demand for e-commerce. It’s been just over five years since the company split from eBay Inc.Īnd now eBay is moving to manage payments on its own, relegating PayPal to a more minor role on the marketplace. He recently left for the world of venture capital.Įsch, who’s been with PayPal long enough to remember when its original peer-to-peer money-transfer service was simply called email payments, steps into the position as PayPal embarks on a new chapter in its corporate history. Venmo’s prior general manager came from a Braintree background, focused on digital payments infrastructure to big tech companies like Uber Technologies Inc. The company is in the process of introducing QR code payments and will launch its own credit card, adding to existing options like a debit card and an online checkout button. The company has been slowly plodding along with attempts to monetize Venmo over the past three-plus years, but now it plans to “bring a lot of feature functions and capabilities to market over a relatively short period of time,” Esch said. Those types of payments can lead to more revenue for Venmo, as the service can charge the merchants on the other end of the transaction,much like core Paypal does, while continuing to allow users to send payments for free, and Esch hopes that Venmo can expand further into business payments. Once primarily a way for friends to split the dinner check without paying fees, PayPal’s Venmo service has increasingly become a tool that lets people pay artists for virtual concerts or tip service workers during the pandemic. “This is our time and we’re really going to seize the moment,” Esch told MarketWatch this week in an exclusive post-earnings interview. PayPal acquired Venmo as part of its $800 million purchase of startup Braintree in 2013. The Motley Fool has a disclosure policy.Making Venmo a true money machine for PayPal will depend on its new general manager, Darrell Esch, a PayPal veteran who took over the role in March after the company cycled through leaders over the previous four years. The Motley Fool recommends eBay and recommends the following options: long January 2022 $75 calls on PayPal Holdings and short October 2021 $70 calls on eBay. The Motley Fool owns shares of and recommends PayPal Holdings, Pinterest, and Square. Matthew Frankel, CFP® owns shares of Pinterest and Square. A lot of big catalysts in PayPal's business. Now eBay is down to just 4% of PayPal's revenue. It started out as a subsidiary of eBay (NASDAQ: EBAY) not that long ago. Honey is the big recent example, the discount shopping platform. Most acquisitions PayPal has made have been in cash and without taking out debt because the company is generating money that it's using to acquire businesses. PayPal is expected to generate about $5 billion in free cash flow this year alone. Unlike a lot of these big fintech companies, PayPal is consistently profitable. The pandemic accelerated the digital payments transformation, which is why PayPal's payment volume grew 40% year over year in the last quarter. That's growing really rapidly, but it's still a pretty small part of PayPal's business, $58 billion out of $311 billion in payment volume in the second quarter. We own a vacation rental, and when friends stay there, sometimes they'll Venmo me for some of the cost. Venmo is the biggest growth area of the business, I give Venmo payments all the time. There's over $1 trillion flowing through PayPal's ecosystem. In the second quarter, PayPal's payment volume was $1.2 trillion on an annualized basis. Those active users make 4.7 billion transactions, individual purchases on PayPal's platform every quarter. It's not even as dilutive as say Square (NYSE: SQ) acquiring Afterpay in stock. This is definitely a manageable acquisition for them. They're are a big company, almost a $300 billion market cap, they're roughly eight times the size of Pinterest (NYSE: PINS). Everyone knows what they do, they're a payment processor. Matt Frankel: I'll give you an overview of what PayPal does real quick. *Stock Advisor returns as of October 20, 2021 ![]() and PayPal Holdings wasn't one of them! That's right - they think these 10 stocks are even better buys. They just revealed what they believe are the ten best stocks for investors to buy right now. ![]() After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* When our award-winning analyst team has a stock tip, it can pay to listen. 10 stocks we like better than PayPal Holdings ![]()
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