What Is PayPal 3.0 — And How Does It Affect Investors?

PayPal Holdings Inc PYPL is undertaking several growth initiatives that could shape its future, according to BofA Securities.

The PayPal Holdings Analyst: Jason Kupferberg maintained a Neutral rating on PayPal Holdings, with an unchanged price target of $118.

The PayPal Holdings Thesis: The company has evolved since its spinoff from eBay Inc EBAY in 2015 and is entering the third phase of evolution, Kupferberg said in the note.

“We characterize PayPal 1.0 as the period from 2015 until the start of the pandemic, during which the company made difficult but sensible strategic decisions, such as embracing consumer choice and not renewing the EBAY Operating Agreement,” the analyst wrote.

“During the PayPal 2.0 era, the company experienced significant tailwinds from the pandemic, and adopted its 'Super App' strategy. However, those tailwinds proved to be more transitory than expected, leading PYPL to cut guidance the two past quarters,” he added.

Referring to PayPal 3.0, Kupferberg mentioned, “Over the past 12-18 months, PayPal has rolled out a series of newer growth initiatives, such as Pay in 4 and crypto, as well as additional monetizable Venmo products (credit card, Business Profiles), and an updated digital wallet which will continue to add more financial services features (savings, investing, rewards, etc).”

“In our opinion, the success of these initiatives will ultimately be a major determinant of PYPL’s ability to achieve its stated target for a 20% revenue CAGR from ’22-’25,” he added.

PYPL Price Action: Shares of PayPal Holdings had declined by 1.78% to $110.51 at the time of publication Thursday.

Photo: Courtesy PayPal