PayPal makes a push to get to the front of the raceThe big boys are getting into the BNPL game, and PayPal just jumped on the bandwagon with the acquisition of Tokyo-based payment firm Paidy for around $2.7 billion.
The buy-now-pay-later (BNPL) market has seen a boom over the past 18 months as consumers have searched for ways to buy their coveted items without going into loads of debt, and now PayPal is looking to keep ahead of the game with the acquisition of Tokyo-based BNPL group Paidy. PayPal launched its “Pay in 4” scheme last year as a foray into the market in August last year, and this acquisition will be a way to expand into Japan – which boasts an online shopping market has more than tripled in volume over the last 10 years to around $200 billion.
The industry is becoming increasingly crowded with up and coming players like UK “super-app” Revolut and fintech superstar Klarna, and recently the big dogs have jumped on board too. Amazon (AMZN) acquired US-listed consumer credit provider Affirm last month to make instalment payments an option on the platform, and Jack Dorsey’s fintech company Square (SQ) is expanding into the market too after buying successful Australian payments firm Afterpay.
The BNPL later is set to continue making gains, with the percentage of young consumers in the U.S. using the service increasing six-fold from 2019 to 36%, and it’s expected that consumers will spend nearly $100 billion on purchases using installment payments in 2021 – up from $24 billion in 2020.
Paypal slips on Q2 earnings, but crypto momentum is buildingPayPal ends the week on a low note, down over 8% in two days following light second quarter revenue and a drop in profit from last year. The losses continue into Monday, sinking a further 1.65% to close at $270.99.
Shares of online payments giant PayPal lost just under 6.27% on Thursday after second quarter earnings results that left investors worried. The fintech firm beat on earnings but missed on revenue expectations, reporting earnings per share of $1.15 on revenues of $6.24 billion, compared to estimates of $1.12 in earnings per share on $6.27 billion in revenue. Net profit was down 23% from the same period the year before to $1.18 billion. However, it did manage to add 11.4 million new accounts, taking its user count to 403 million.
The payments platform has made big moves into crypto over the past year, launching a service in October 2020 that allowed users to buy, hold, and sell cryptocurrencies. It has since created a dedicated crypto and blockchain business to support the service, and as of March this year consumers are able to pay for items directly using their digital assets. According to CEO Dan Schulman, PayPal’s crypto business has far exceeded expectations, and now the company is building out those operations by hiring over 100 new additions to join the team.
After its Thursday losses, PayPal sank a further 2.7% on Friday and 1.65% to make a loss of almost 11% in three days, leaving the stock at $270.99 as of Monday close.
Can't stop the shop - Paypal profits from the pandemicIt’s been a volatile week, but PayPal was up 5% in after-hours trading yesterday after releasing its latest earnings – and raising its guidance, thanks to all of us shopaholics out there.
Households have been all over PayPal during the pandemic as online shopping got a boost from stay-at-home orders, and it looks like its popularity is set to continue as we all start to resume normal life. Who wants to trail around the shopping mall in person anyway, apart from moody teenagers?
The company reported $1.22 in adjusted earnings per share on revenue of $6.03 billion, compared to expectations of $1.01 in earnings per share on $5.90 billion in revenue. Total payment volume was $285 billion, and net profits rose to $1.10 billion from just $84 million the same period the year before, maybe thanks to the 14.5 million new active accounts it won over the quarter, bringing its overall user base to just under 400 million.
Revenue was up 31% since Q1 2020, and on the company’s recent earnings call CEO Dan Schulman pointed to its investment in the crypto craze as a key engine for growth: allowing customers to buy, sell, and transact in cryptos. Total payment volume also surged by over 50% to $285 billion in the first quarter - making it the first year that its payment volume has topped $1 trillion.
said Schulman. He also noted that half of crypto users open their PayPal app daily, suggesting increased user engagement.
With things going so well, PayPal has unsurprisingly upped its full year guidance, and now expects to earn $3.33 per share on revenue of $25.75 billion, up from the previous target of $3.20 per share on $25.5 billion in revenue. Net new active accounts are set to hit up to 55 million, up from 50 million.
With its network of now 26 million retailers, PayPal’s crypto efforts could open up a whole new audience – making it one of the biggest crypto platforms in the US and potentially rivalling even Coinbase as a wallet provider and exchange platform. Sky’s the limit.