HomeBusinessPYPL Stock: PayPal Downgraded on Growing Apple, Square Competition

PYPL Stock: PayPal Downgraded on Growing Apple, Square Competition

Incoming PayPal shares (PYPL) CEO Alex Chriss faces a difficult turnaround, says an analyst who downgraded PYPL stock on Monday.


Chriss, former president and CEO of Intuitive‘s (INTU), small business and self-employed group, will take over as CEO of PayPal on September 27.

SVB MoffettNathanson analyst Lisa Ellis downgraded PYPL stock to market perform. Apple‘s (AAPL) push into digital payments continues to put pressure on PayPal, Ellis said in a report. There is also growing competition with Square parent Block (SQ), she said.

“Looking ahead, we unfortunately expect PayPal’s gross profit growth to remain subdued, in the low to mid single digits,” Ellis said. “We see the potential for further negative impact from our estimates, especially given the strong momentum of Apple Pay, which we fear will benefit from powerful network effects in payments.”

On the stock market today, PYPL stock fell 2% to close at 62.94. PayPal stock is down 12% in 2023.

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PYPL Stocks: Venmo Upside Limited?

“In addition to the competitive pressure on PayPal-branded checkouts and the uncertain impact of Braintree’s aggressive pricing strategy, new PayPal CEO Chriss faces a few other challenges,” Ellis said.

“The recent slowdown in Venmo’s growth, likely due to competitive pressure from Block’s Cash App. Venmo is not currently a significant revenue contributor to PayPal, but has long been viewed as a source of long-term upside potential.”

Chriss replaces Dan Schulman and will remain on PayPal’s board of directors until May 2024, after he steps down as CEO.

San Jose, California-based PayPal has evolved from an online payment service to a mobile shopping and personal payments service.

According to IBD Stock Checkup, PayPal ranks No. 17 out of 38 stocks in IBD’s Finance-Credit Card and Payment Processing industry group. PYPL stock has an IBD Composite Rating of 57 out of 99.

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


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