PayPal (NASDAQ:PYPL) has long been known as one of the simplest ways to make and receive payments around. It’s been part of a range of use cases, from cross-border payments and fulfillment to hobbyists at trade shows. However, Its luster has declined in recent years, and it’s looking to make a comeback with some new features. Investors were skeptical, however, and sent shares declining around 4% in Thursday afternoon’s trading.
PayPal rolled out six new upgrades to PayPal and Venmo, mostly driven by advances in artificial intelligence. One of the biggest upgrades is known as Fastlane by PayPal. This pilot program allows users to make purchases without remembering passwords, updating personal information, or even handing out a credit card number.
It doesn’t work everywhere, reports note, but wherever it does work, it means about a 40% faster checkout time. PayPal wants this to be in as many places as possible, so they’re looking to get it to 35 million different merchants. Further on the slate are Smart Receipts, which allow merchants to suggest purchases, and the Advanced Offers Platform, which offers cash-back offers to users according to previous purchases.
A Disturbing Lack of Faith
So, what happened here? This looks like a huge opportunity for PayPal to make big piles of new revenue driven by the effective use of data. It’s not like this is some hair-brained scheme, so why aren’t investors piling in? A report noted that the advances were considered underwhelming; one analyst scoffed them aside as “table stakes.” Indeed, there are two common themes running through the PayPal advances.
One, PayPal is going to be a lot more intrusive about getting your data and presenting you with it in the form of offers and “encouragement” to buy new products. Two, PayPal is about to be super dependent on people having disposable income, which has been a doubtful proposition for several months now. Just look at how many people had a “BNPL” Christmas last month; reports noted that it made up about $16.6 billion of the holiday’s spending.
Is PayPal a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PYPL stock based on 15 Buys and 16 Holds assigned in the past three months, as indicated by the graphic below. After a 25.44% loss in its share price over the past year, the average PYPL price target of $71.58 per share implies 18.59% upside potential.
