PayPal Holdings Inc (NASDAQ: PYPL) has done a great job transitioning into the digital payments space after being spun off from its parent, eBay Inc (NASDAQ: EBAY) in 2015.
Whether anyone saw it at the time, the entire financial sector was about to undergo the digital and mobile transformations that we’re still seeing unfold today. And PYPL stock has mostly reflected that.
What that also means is, when the regulatory environments for these sectors are rapidly changing along with potential technology tools, it’s even more complicated.
And that’s what we’ve been living with as PYPL has come of age.
Big banks that had the money and bodies to incorporate new tech into their systems continue to use tech more as a tool to develop efficiencies rather than a way to improve the relationship between the institution and its customers.
Smaller institutions — local banks, credit unions, etc — don’t have the money or staff to go up against the big players that are invading their markets. But they do have a better feel for their customer base’s needs.
This is the gap fintech stocks have moved into, hoping to cut down the corporate red tape and aloofness, while offering faster decision-making and a variety of financial tools that smaller banks can’t offer as easily.
As this massive transition began, PYPL was ready to grow and saw a market ripe for its products. And since it had built a very solid reputation as eBay’s financial arm, it had a lot of good will that many newcomers didn’t.
That also came in handy since PYPL wasn’t just fending off newcomers. It was going toe-to-toe with the big players, like Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA).
And PYPL stock has been doing a very good job. Since its spinoff, the stock is up more than 144% in the past 3 years. Year-to-date, its up 14% and has been pretty steady for the year.
PYPL Stock Has Stayed Above the Fray in a Dramatic Market
Because consumers have stayed healthy and the economy is doing well, financials haven’t been caught up in too much drama, broadly speaking.
And PYPL has become a leader in the hot new peer-to-peer payments space with its Venmo app. Creating these features aren’t complicated, but if you’re first to market and you establish a reliable brand, it can mean sector dominance if you play it right.
Also, PYPL has been the subject of gossip about partnering with Facebook Inc (NASDAQ: FB) as its payments provider. That would be huge.
However, it doesn’t need an FB deal to make it a compelling choice. My Portfolio Grader gives it a B ranking right now, simply because the space is still wide open and PYPL is in acquisition mode.
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Source: Investor Place