Stock Analysis & Ideas

PayPal (NASDAQ:PYPL) Stock: Testing New Horizons

Story Highlights

PayPal is launching its Pay with Venmo app on one of the world’s largest e-commerce platforms. Analyst Joseph Vafi is highly optimistic about the launch and thinks it is a win-win situation for both.

Fintech company PayPal Holdings (PYPL) is primed to get a big boost from its launch of the Venmo app on the e-commerce site (AMZN). PayPal’s Pay with Venmo app is an easy-to-use mobile checkout experience for online shopping. The company is launching this app on in the fourth quarter of this year.

Canaccord Genuity analyst Joseph Vafi is highly optimistic about this foray and shared his views in a research note yesterday. The five-star analyst reiterated a Buy rating on PYPL stock with a price target of $160, which implies a massive 89.9% upside potential to current levels.

Following the news, PYPL shares skyrocketed to reach about $217 in after-hours trading, up almost 157% from its day’s close of $84.26. Meanwhile, the stock has lost 56.8% year to date amid the broader market sell-off and plunging crypto values.

Vafi’s Views About Venmo’s Launch on Amazon

Notably, Venmo boasts about 55 million monthly active users in America, all of which will become active users on Amazon. On the other hand, Amazon accounts for nearly 40% of the U.S.’s e-commerce market share, thus opening an even bigger market potential for Venmo’s usage. Vafi believes this combination will bode well for PayPal and could boost its revenue and adjusted earnings per share (EPS) over time.

Moreover, the analyst believes that this launch could push other e-commerce platforms to approach PayPal for Venmo, thereby trying to get these monthly active customers to their platforms. Such attention from e-commerce platforms will propel Venmo’s usage and acceptance by merchants.

PayPal’s move is viewed as an “upcoming positive catalyst” by Vafi. He remodeled his estimates based on this deal. As per his analysis, PayPal could see its revenue and EPS jump by about 1.5% and 3% points, respectively.

Meanwhile, the analysis shows a take rate range of 1.4% to 2.2% and market penetration of between 2% to 10% depending upon the time and marketing efforts by PayPal.  

PayPal and Crypto

PayPal is a financial technology company providing payment processing services to vendors and commercial users for a fee. The company entered the much-hyped cryptocurrency space in October 2020 when it started allowing users to buy, sell, and hold these digital currencies in their wallets.

Then, in June 2022, PayPal also started allowing users to transfer cryptocurrencies across other wallets and exchanges. The company allows users to trade in Bitcoin (BTC-USD), Ethereum (ETH-USD), Bitcoin Cash (BCH-USD), and Litecoin (LTC-USD).

Is PYPL a Buy, Sell or Hold?

Wall Street analysts concur with Vafi’s optimism on PYPL stock and have awarded it a Strong Buy consensus rating. This is based on 25 Buys and eight Holds, on TipRanks. The average PayPal Holdings price forecast of $119.86 implies 42.3% upside potential to current levels.  

Parting Thoughts

PayPal is blooming mightily in both the fintech and crypto spaces. Analysts have a high conviction in PYPL stock’s future trajectory. Although the current macroeconomic headwinds may hinder PayPal’s short-term growth, the company is well positioned for massive long-term growth potential.


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