PayPal (PYPL) recently announced its intention to start its own stock-trading platform, a lucrative segment that could bring forth even more growth for the fintech giant.
As other competitors within the red-hot space look to break into the payments and wallets arena — think Shopify (SHOP) with its Payments business, and Alphabet (GOOGL) with Google Pay Send — it’s clear that PayPal is going to have to spread its wings into new areas if it is to sustain its marvelous growth rate.
As PayPal makes lateral moves, I remain bullish on the name. (See PYPL stock charts on TipRanks)
Undoubtedly, the fintech arena could stand to get very crowded through the 2020s. PayPal will need to play smart to stay at the top, with expansion into new arenas like stock trading, while defending its turf in peer-to-peer payments.
Could PayPal Go after Robinhood’s Lunch?
It seems like such a long time ago that PayPal was just a part of eBay (EBAY). Today, the company is much larger than eBay, and its foray into stock trading could cause the gap to widen even further, as it looks to give Robinhood Markets (HOOD) a challenge.
Indeed, PayPal’s announcement that it’s getting into trading has many investors pounding the table on shares. PYPL stock is up 6% since August 18.
Whether we’re talking about the rise of the everyday retail investor, or the WallStreetBets subreddit, it’s clear that today’s young people want more out of their brokerages, not just in terms of low (or no) commissions, but in terms of the added features and technology incorporated.
Robinhood’s controversial payment-for-order flow model may leave a door wide open for competitors like PayPal to jump into stock trading. Given PayPal’s innovative abilities and deep pockets, it could carve out a share of the lucrative market for itself.
Perhaps PayPal could take a jab at the likes of a Robinhood once its stock-trading platform is ready to go?
Such a strategy shouldn’t be ruled out, especially as Robinhood finally meets its match in its corner of the fintech space. The timing of PayPal’s big move couldn’t be better.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, PYPL stock comes in as a Strong Buy. Out of 26 analyst ratings, there are 23 Buys, and three Holds.
The average PYPL price target is $337.70. Analyst price targets range from a low of $280, to a high of $375.
Bottom Line
Analysts are overwhelmingly bullish on PYPL these days. Its stock-trading platform could pave the way for a new leg of growth.
Investors shouldn’t hesitate to consider the name, even after its latest upward move. There’s a very large chance that PayPal will be profoundly successful with its push into stock trading.
Disclosure: Joey Frenette does not own shares of any company mentioned at the time of publication.
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