PayPal: Booming growth is more than just Venmo

By Hecht’s calculation, PayPal, Venmo, and Xoom have added more than 10 million downloads in each of the last four quarters, exceeding that of its most industry peers. 

“To this point, while Square’s Cash app has recently exceeded Venmo/PayPal Mobile/Xoom in terms of app downloads – in part due to its cryptocurrency functionality – we believe user engagement remains strong at Venmo and PayPal mobile apps, providing growth momentum in both core and new business channels,” Hecht said, adding that daily average users at PayPal Mobile reached around 600,000 in second quarter, nearly twice that of Square’s Cash app.

In February, eBay, which accounts for around 13% of total payments processed by PayPal, said it signed up Adyen as its new primary payment processor and will use PayPal as a form of payment until July 2023. Dan Schulman, CEO of PayPal, described the changing relationship with eBay as very “manageable” and commented that it was in line with PayPal’s new strategy.

And Jefferies analysts agree. 

“The vast majority of the eBay volume is PayPal branded volume, which is the volume that drives the profits from the affiliation, and we envision a slow transition of this, preserving much of the volume as PayPal continues to grow away,” they added.

Last month, the online-payment system reported adjusted earnings of $0.58 per share in second quarter, topping the $0.57 that was expected. Revenue rose 21% versus a year ago to $3.86 billion, edging out the $3.81 billion estimation. PayPal forecasted third-quarter revenue between $3.62 billion to $3.67 billion, below the consensus of $3.7 billion.

The team reiterated its “buy” rating for PayPal and raised its price target to $110 from $100 — more than 20% above its current trading price.

PayPal shares are up 25% this year.

Ethel Jiang/Business Insider