It’s been a wild ride for PayPal these past 25 years. Why is this company on the rise again, and will it continue to make banking news?
Do you remember the last time you wrote a check? Do you even know what a check is? Once upon a time, people signed these little pieces of paper that authorized banks and other institutions to send money from one account to another.
What Is Paper?
Very cute. Seriously, though, checks were a big thing before Al Gore invented the internet. Now we have electronic payment systems and companies like PayPal to operate them. PayPal has been around for over 25 years now; there’s a good chance this is the way your employers/clients send you your money.
PayPal (PYPL) is also enjoying something of a rally in 2024. At press time, PayPal’s market cap sits at US$69.01 billion, up 4.24% from the end of last year. That’s still a pittance compared to their pandemic peak of $356.75 billion in July 2021, but this latest bump is especially notable given the turbulence the stock market is going through right now.
This company is definitely worth a closer look. Let’s dig deep, peel back the layers, and uncover the real story behind the latest stock reports before betting on them at top-rated sportsbooks.
What Is PayPal?
PayPal Holdings, Inc. is a public company based in San Jose, California that serves pretty much the entire planet. It was founded in December 1998 by Max Levchin, Peter Thiel (yes, that one) and Luke Nosek; originally called Fieldlink, they changed their name to Confinity, and they soon went to market with their first product: security software for your Palm Pilot.
That didn’t get very far. However, it was a relatively short step from there to digital wallets; Confinity named their new product PayPal, launching in late 1999, and it was a big hit with people using eBay to buy and sell products online.
By March 2000, PayPal had merged with X.com, Elon Musk’s competing online bank. They stuck with the X label at first, but customers weren’t happy with that, so they restructured, kicked Musk out of the company, and became PayPal Inc. in June 2001.
Long story short, eBay bought PayPal in October 2002 for $1.5 billion in stock. Then it was spun off again in July 2015; Alex Chriss, a senior executive at Intuit, became their CEO last September.
What Happened to PayPal?
The pandemic – and Apple Pay.
Business was booming for PayPal after COVID-19 had people confined to their homes, buying most of their stuff online. But as the pandemic waned and people went back outside, they started using “contactless debit cards” like Apple Pay to buy things.
PayPal’s market cap had fallen by 80% when Chriss took over as CEO from the retiring Dan Schulman, who oversaw their 2015 spin-off from eBay. But business is indeed picking up under the new regime.
The company has invested in fintech start-ups like NC Technologies (based in Cologne, Germany) and Qoala (based in Jakarta, Indonesia), and they’ve recently poured more money into PPRO (based in London), giving investors reason to believe that more growth is on the horizon.
What Is Fintech?
That would be short for “financial technology.” If you’re using software on a device to perform a financial transaction, you’re using fintech; PPRO, for example, is a “local payments infrastructure provider” that makes it easier to conduct business across international borders.
As with PayPal itself, the fintech industry has contracted considerably since the pandemic crested. But even while the market was correcting, fintech adoption was on the rise, up some 38% between 2020 and 2022 according to Plaid’s Fintech Effect Survey.
By investing in the larger fintech space, PayPal give themselves multiple avenues for growth while keeping things in “close economy” with their own product. This diversification also cushions the blows they absorb from competitors like Apple Pay. It’s just smart business.
Should I Buy PayPal?
That depends on your portfolio, of course, and the goals you’re trying to attain.
We’re journalists here at the home office, not investment advisors, but we’re happy to report that analyst Gus Gala is among those who have PayPal stock targeted to reach $80. PYPL is trading at $64.63 as we go to press.
Other analysts are even more bullish. As always, you should continue to do your research before opening up your wallet and/or purse, but as one of the most established companies in the fintech space, PayPal just might be your huckleberry.
