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PayPal (PYPL) Eyes Stock Trading Space to Diversify Business

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PayPal (PYPL - Free Report) is eyeing the stock trading market with plans of rolling out a platform, allowing users to trade equities.

The company’s intentions regarding stock-trading solutions are evident from its hiring of a brokerage industry veteran namely Rich Hagen.

Notably, Hagen is currently serving as the chief executive officer of Invest at PayPal, an unreported division of PayPal.

We believe that a stock-trading platform will likely give the company strong traction amid the pandemic, which has imposed stay-at-home restrictions. Along with the pandemic-led guidelines, the inflow of government stimulus checks has attracted people’s interest toward commission-free stock trading via online mode.

Hence, PayPal is likely to win investors’ confidence if it finally forays into the stock-trading platform market. Its stock price already rose almost 4% on Aug 30 after the breaking of the news.

Moreover, its deepening focus toward business diversification by making a foray into new and potential markets continues to aid it in sustaining investor optimism.

On a year-to-date basis, PayPal has gained 23.2% against the industry’s loss of 2.5%.


Zacks Investment Research
Image Source: Zacks Investment Research


More Into the Headlines

In a bid to execute the plans related to the offering of an equity trading platform, PayPal is in talks with potential industry partners.

Reportedly, the company’s stock-trading app is expected to come out in 2022 if the above-mentioned plans are executed.

This, in turn, will aid PayPal in capitalizing on the growth prospects in the online trading platform market.

Per a Verified Market Research report, the market is expected to reach $18.3 billion by 2027, witnessing a CAGR of 4.2% between 2020 and 2027.

Further, a Fortune Business Insights report shows that the market is likely to hit $8.6 billion in 2021 and reach $12.2 billion by 2028, witnessing a CAGR of 5.1% between 2021 and 2028.

The rising demand for a smartphone-based customized and integrated trading platform is expected to continue driving growth in the online trading space in this fast-paced digitally advancing world.

Competitive Scenario

Companies like Square (SQ - Free Report) , SoFi Technologies (SOFI - Free Report) and Robinhood (HOOD - Free Report) are some notable incumbents in the stock-trading platform space.

Notably, Square, which is considered to be one of the strong competitors of PayPal, entered the stock trading space in 2019 via the Cash App. Notably, Cash App offers free stock trading services. Users are allowed to trade fractions of a stock for as little as $1.

Meanwhile, SoFi offers a fractional trading feature to customers. Further, one of its services called SoFi Active investing provides commission and fee-free trading of stocks.

Robinhood, which is a notable player in the stock trading platform space, offers a zero-fee stock trading service.

Nevertheless, PayPal is likely to give tough competition to the above-mentioned players with its latest intentions.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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