PayPal (PYPL) plans to expand its business empire beyond payments and cryptocurrency trading. Citing people familiar with the matter, CNBC reported that the payment company plans to roll out a stock trading platform. The platform will allow people to trade individual stocks. PYPL shares rose 3.64% to close at $288.47 on August 30.
According to the source, the San Jose-based company has reportedly made some progress and has hired brokerage industry veteran Rich Hagen. A co-founder of online brokerage firm TradeKing, Hagen will run “Invest at PayPal”, the company’s new division.
CNBC also reported that PayPal has already held discussions with potential industry players as part of a plan to partner with or buy an existing broker-dealer. (See PayPal stock charts on TipRanks)
Notably, if PayPal was to go it alone and become a stock brokerage firm, it would have been required to apply for a membership through the Financial Industry Regulatory Authority (FINRA). The process could take more than eight months.
PayPal’s latest push, if true, comes at a time of increased retail trading, with more than 10 million new individual investors having entered the market, according to JMP securities. Markedly, orders from people working from home have increased significantly over the past year spurred by government stimulus and breathtaking moves by GameStop.
Yesterday, Bank of America Securities analyst Jason Kupferberg reiterated a Buy rating on the stock with a $323 price target, implying 11.97% upside potential to current levels.
According to the analyst, aggressive expansion with the addition of new features such as credit cards, crypto trading, and Business Profiles should continue to drive strong growth in Venmo users.
Kupferberg stated, “The punchline is that in our base case, we estimate total active Venmo users could reach 120M in 2023 (up from 76M as of 2Q) and that ARPU for Venmo could reach $19.92, reflecting a ~30% CAGR from 2020-2023.”
Consensus among analysts is a Strong Buy based on 22 Buys and 3 Holds. The average PayPal price target of $336.68 implies 16.71% upside potential to current levels.
Additionally, PYPL scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.