Online payment processing firm PayPal Holdings Inc (NASDAQ:PYPL) has been under some scrutiny in recent weeks as tech stocks take a beating in the wake of Trump’s election victory. Not only are investors uncertain about what the future holds under such an unpredictable President, but they are questioning whether PYPL stock will continue to be a growth play in an industry where competition is stacking up quickly.
PayPal stock has made its way below $40 per share this month, making now a good time for long-term investors to add it to their portfolio in order to capitalize on the growing mobile payments market.
The online payments space is expected to be worth over $1 trillion by 2019, so investors should include financial tech firms in their portfolios in order to take advantage of this aggressive growth. While there are many choices to be had, PYPL is a solid bet as the firm is well positioned for the future.
New entrants like Stripe, whose $9.2 billion valuation turned more than a few heads, may have the benefit of learning from their competitors’ mistakes, but PayPal stock has something most other mobile payment companies don’t — a highly recognizable name that people feel they can trust.
Five Reasons PayPal Stock Will Keep Growing
With that as a backdrop, here are five reasons PYPL stock is bound to continue growing, starting with its name.
Brand Recognition
One of the largest hurdles to being successful in the financial tech space is overcoming the public’s fear of online payments. Having a solid brand name that has been around for a long time is a huge advantage, and PayPal has just that.
The company is perhaps the most widely known online payment processor, so the its efforts to expand its offerings are much easier to sell, as the public already knows PYPL as a reputable firm and is more likely to trust the company with their first mobile payment experience.
Overall Dominance
PayPal is well established, but the company hasn’t just been resting on it’s brand name. In order to keep up with its competitors, PYPL has made several strategic acquisitions and partnerships that suggest management is working to ensure that it remains relevant in the years to come as the payments space develops.
Strategic Partnerships
One of the things that PayPal management has done extremely well has been keeping an eye on its peers and ensuring that PYPL stock is in a position to grow in a competitive environment. The firm recently inked deals with both Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) in order to make PayPal payments accessible in-store and give people more options for how to pay using their PayPal accounts.
While the partnerships will reduce margins in the short-term, PYPL’s decision to work with the two major credit card companies rather than against them is likely to propel the firm forward.
Maximizing Millennials
PayPal has also added new features that prove the company has been working to keep pace with the coveted millennial generation. Paying via mobile phone has become more popular, especially among millennials. Some believe that plastic credit cards could be completely phased out in the coming years as more people use their phones to pay.
PYPL has been working to update its service to keep up with this trend by adding One Touch, a service that allows people to make mobile purchases without entering all of their details each time, and acquiring Braintree, a Stripe competitor.
Social Payments
One of PYPL’s most exciting initiatives was the acquisition and integration of social media network Venmo. Venmo blends mobile payments with social media by allowing people to send money to each other quickly and easily online. The funds can include messages or emojis and transactions show up in a news-feed that friends can see.
Bottom Line on PYPL Stock
PayPal’s growth streak isn’t over yet, so long-term investors should consider adding the firm to their portfolio in order to gain exposure to the growing mobile payments industry. PYPL stock is facing stiff competition in the years to come, but the company’s solid foothold within the industry and future growth plans make it a good bet.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.
