A failed Innovation Day sent PayPal (NASDAQ:PYPL) stock down almost 4% on Jan. 25.
Investors were told to see the event as a catalyst for higher stock prices. They were shown faster checkouts, improved business profiles at Venmo, and even AI-based recommendations on shopping sites.
But the failure to “shock the world,” promised by CEO Alex Chriss, disappointed some investors. PayPal opened this morning at $60.60, its market capitalization near $61 billion.
Shocked Not Shocked
The “First Look Keynote” was the first major test for Chriss, who was hired as CEO last year.
In his online talk, he did offer some new features. PayPal has integrated biometric data into its checkouts to speed them up securely. A FastLane feature allows single-click checkouts. Smart Receipts can now include product recommendations. A new Advanced Offers platform includes PayPal data from across its network. There’s also a CashPass feature allowing quicker access to sales. Venmo now gives business profiles subscribe buttons, profile rankings, and the ability to offer promotions.
However, most of the features are not new to the industry. Banks, brokers, and payment rivals have had biometric IDs and single-click checkouts for years.
Analysts were pounding the table for PayPal recently, claiming it’s undervalued compared with transaction processing rivals like Visa (NYSE:V). PayPal currently sells for 18 times earnings, against Visa’s 31.
Visa’s stock also doubled over the last year, while PYPL is down 35%. The underperformance led to PayPal replacing long-time CEO Dan Schulman in August with Chriss, who is just 44 and was hired from Intuit (NASDAQ:INTU).
The problem is, as I pointed out last month, that PayPal is now in direct competition with Cloud Czars like Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), who are embedding payments into their operating systems.
PYPL Stock: What Happens Next?
Chriss’ makeover of PayPal is going to take time. Analysts are now going to want to see bottom-line results before they pound the table for it again. The lesson for Chriss is to underpromise and overdeliver.
As of this writing, Dana Blankenhorn had LONG positions in AAPL and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
