Investors who want exposure to cryptocurrencies but are terrified of the current volatility affecting digital coins should look to PayPal (NASDAQ:PYPL) stock as a safe way to capitalize on assets such as Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD).
PayPal is much more today than an online payments company. The company has been aggressively diversifying during the past year, using the pandemic as a catalyst for change. Now, PayPal is pushing hard into cryptocurrencies.
Customers of PayPal can now buy, sell, hold, and checkout with cryptocurrencies, including Bitcoin and Ethereum, as well as lesser-known digital assets such as Bitcoin Cash (CCC:BCH-USD) and Litecoin (CCC:LTC-USD).
People can invest as little as $1 in cryptocurrencies and no special accounts are needed to deal in the digital tokens on PayPal’s platform. Venmo, a mobile wallet that’s owned by PayPal, also enables people to buy and sell cryptocurrencies simply and easily.
It’s fair to say that PayPal is at the forefront of facilitating cryptocurrency transactions. Yet the company is diversified enough that its fortunes are not inextricably linked to the value of digital coins.
With PayPal stock currently down 15% from its 52-week high of $309.14, now would be a good time to get in on a surefire growth company.
A Closer Look at PYPL Stock
PayPal’s first-quarter results proved that the financial technology (fintech) company is running at full tilt. Revenue in the first quarter rose 29% year-over-year and total payment volume jumped 46%.
Earnings per share (EPS) increased to $0.92 from $0.07 a year earlier. PayPal added 14 million new active accounts in the first three months of this year, bringing its total active accounts globally to 392 million.
Free cash flow at the end of March stood at $1.5 billion, up 27% from the first quarter of 2020.
PayPal Chief Executive Officer Dan Schulman called the results the company’s “strongest quarter ever.”
Schulman also raised PayPal’s guidance for full-year 2021, saying the company now expects revenues to be 20% higher than previously forecast. He also suggested an EPS of $3.33, up from a forecast of $3.20 before, and that the total number of new active accounts this year should grow by 55 million, better than a previous forecast of 50 million.
The earnings results and bullish guidance have helped PYPL stock gain 10% since May 12. The share price now stands at $263.
New Ventures
While PayPal has certainly embraced cryptocurrencies, much of the company’s success is due to a number of new ventures it has undertaken.
These include launching QR code payments that enable people to make in-store purchases with a smartphone, introducing a Venmo credit card, and partnering with financial service provider Fiserv (NASDAQ:FISV) to expand its QR code service to Clover point-of-sale systems.
Fiserv merchants using the Clover point-of-sale system facilitated over $135 billion in payments in 2020.
Additionally, PayPal has formed a partnership with China’s Alibaba Group (NYSE:BABA), one of the world’s largest e-commerce companies. The agreement allows consumers outside of China, notably in the U.S., to shop across Alibaba’s websites.
In the third quarter of this year, PayPal plans to launch what it is calling a “next-generation digital wallet,” which may further advance its cryptocurrency offerings. All told, PayPal says that it sees a $110 trillion market opportunity in front of it.
Buy PYPL Stock For the Growth
While PayPal has existed since 1998 and been publicly traded since 2002, the company remains in growth mode. It continues to diversify its products and services and push into new markets.
PayPal is currently expanding into Africa through a partnership with fintech company FlutterWave. The company’s earnings support the case that PayPal is a leading fintech company and one that is trusted and supported by a global user base.
Investors on the hunt for profitable growth stocks that have a dominant market position and big upside potential should buy shares of PayPal. While PYPL stock remains below its 52-week high, it is still up 13% year-to-date following a gain of 70% in the past 52-weeks.
The median price target on the shares is $315, implying that they could rise another 20% in the next 12 months. The high target on PayPal’s stock is $375. As fintech companies and the cryptocurrency market mature and grow, PayPal is a stock that is hard to ignore.
Disclosure: On the date of publication, Joel Baglole held long positions in FISV and BABA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
