PayPal Stock Driver? Venmo Profits By 2021

Look for PayPal Holding’s (PYPL) Venmo person-to-person payment service to emerge as a meaningful revenue contributor in 2020 and to turn profitable a year later, says an analyst. PayPal stock edged up on Friday.


Credit Suisse analyst Timothy Chiodo on Friday initiated coverage on PayPal stock with an outperform rating.

The Venmo service lets friends or families transfer money to each other. Venmo launched a debit card in 2018 and offers a “Pay with Venmo” option with partners such as Uber Technologies (UBER).

The Venmo service plans to launch a credit card in 2020.

Chiodo estimates that Venmo will exit 2020 with a “$900 million revenue run rate.” He expects Venmo to “reach profitability in 2021, helping to offset eBay (EBAY) headwinds.”

PayPal Stock: Honey, Venmo Synergy Expected

EBay spun off PayPal in 2015. The former parent is phasing out the use of PayPal for its online marketplace.

The Credit Suisse analyst expects synergy between Venmo and recently acquired Honey Science. PayPal bought consumer shopping app Honey for $4 billion.

“We believe Venmo will be an increasingly important driver of PayPal stock, and we expect improvements in the trajectory of Venmo monetization to increase estimates, led by an inflection of Pay with Venmo in 2020, with consumer adoption bolstered by the Honey acquisition,” said Chiodo.

PayPal Earnings Next Week

PayPal reports earnings after the close Jan. 29. Analysts expect management commentary on the outlook for Venmo’s revenue growth and path to profitability.

PayPal acquired Braintree and its then small Venmo service in 2013. It had over 40 million users as of April 2019.

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PayPal stock slipped 0.8% to close at 116.98 on the stock market today.

PayPal stock has neared an entry point of 121.58 ahead of its earnings report.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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