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PayPal (PYPL) Extends Ties With Uber & Strengthens Clientele
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PayPal (PYPL - Free Report) extended its strategic relationship with Uber Technologies (UBER - Free Report) by signing a multi-year global deal.
Per the terms, Uber aims to expand its global card processing network on the back of PayPal Braintree.
The partnership will benefit Uber’s global expansion as PayPal Braintree will aid in boosting its usage of domestic debit network routing in several markets.
Uber will offer PayPal’s value-added services, including PayPal Payouts. Uber plans to expand its payout options by leveraging PayPal Hyperwallet solution, with the help of which drivers will be able to access their funds through PayPal and Venmo.
In order to address the issue of chargebacks, Uber will leverage PayPal Chargehound. Uber will be able to witness advanced customer authentication using Network Tokens, Smart Retries and Account Updater services with PayPal.
This apart, the integration of UberOne with PayPal, which allows customers to save extra while making payments through PayPal wallet or Venmo, remains noteworthy.
We note that the latest deal is expected to benefit both companies.
With the abovementioned efforts, Uber will be able to deliver an enhanced payment experience to its customers.
On the other hand, the deal has added strength to PayPal’s customer base. This highlights the robustness of PayPal’s product portfolio.
Apart from clientele expansion, the underlined partnership is also likely to bolster the adoption rate of PayPal Wallet and Venmo in the days ahead, given the popularity of Uber’s ride-hailing service.
This, in turn, will likely accelerate PayPal’s transaction revenues, which account for the majority of its net revenues.
In second-quarter 2023, transaction revenues amounted to $6.6 billion (90% of net revenues), up 5% from the year-ago quarter’s level.
Our model estimate for 2023 transaction revenue stands at $26.7 billion, indicating growth of 6% from 2022’s level.
Product Portfolio Strength
Recently, PayPal launched a U.S. dollar-denominated stablecoin, PayPal USD (PYUSD), which is fully backed by U.S. dollar deposits, short-term U.S. Treasuries and similar cash equivalents.
It introduced Tap to Pay on Android for Venmo and Zettle users to empower small businesses with seamless payment options.
PayPal strengthened its payment solution offerings for small businesses by adding new features. The features allow small businesses to accept payments made through PayPal, credit and debit cards, digital wallets, Venmo, PayPal Pay Later and Apple Pay.
The strong monetization efforts of Venmo, robust PayPal Checkout experiences and solid momentum in the company’s buy now pay later solutions remain noteworthy.
We believe PayPal’s growing efforts toward strengthening its product offerings will continue to aid growth in its customer base.
This in turn will likely aid the financial performance of the company, which will instill investor optimism in the stock.
Our model estimate for 2023 net revenues is projected at $29.5 billion, reflecting growth of 7.1% from 2022.
PYPL has lost 11.7% in the year-to-date period against the industry’s growth of 50.5%.
Economic uncertainties and foreign exchange headwinds remain major concerns for the stock.
Image: Bigstock
PayPal (PYPL) Extends Ties With Uber & Strengthens Clientele
PayPal (PYPL - Free Report) extended its strategic relationship with Uber Technologies (UBER - Free Report) by signing a multi-year global deal.
Per the terms, Uber aims to expand its global card processing network on the back of PayPal Braintree.
The partnership will benefit Uber’s global expansion as PayPal Braintree will aid in boosting its usage of domestic debit network routing in several markets.
Uber will offer PayPal’s value-added services, including PayPal Payouts. Uber plans to expand its payout options by leveraging PayPal Hyperwallet solution, with the help of which drivers will be able to access their funds through PayPal and Venmo.
In order to address the issue of chargebacks, Uber will leverage PayPal Chargehound. Uber will be able to witness advanced customer authentication using Network Tokens, Smart Retries and Account Updater services with PayPal.
This apart, the integration of UberOne with PayPal, which allows customers to save extra while making payments through PayPal wallet or Venmo, remains noteworthy.
We note that the latest deal is expected to benefit both companies.
With the abovementioned efforts, Uber will be able to deliver an enhanced payment experience to its customers.
On the other hand, the deal has added strength to PayPal’s customer base. This highlights the robustness of PayPal’s product portfolio.
PayPal Holdings, Inc. Price and Consensus
PayPal Holdings, Inc. price-consensus-chart | PayPal Holdings, Inc. Quote
PayPal’s Prospects
Apart from clientele expansion, the underlined partnership is also likely to bolster the adoption rate of PayPal Wallet and Venmo in the days ahead, given the popularity of Uber’s ride-hailing service.
This, in turn, will likely accelerate PayPal’s transaction revenues, which account for the majority of its net revenues.
In second-quarter 2023, transaction revenues amounted to $6.6 billion (90% of net revenues), up 5% from the year-ago quarter’s level.
Our model estimate for 2023 transaction revenue stands at $26.7 billion, indicating growth of 6% from 2022’s level.
Product Portfolio Strength
Recently, PayPal launched a U.S. dollar-denominated stablecoin, PayPal USD (PYUSD), which is fully backed by U.S. dollar deposits, short-term U.S. Treasuries and similar cash equivalents.
It introduced Tap to Pay on Android for Venmo and Zettle users to empower small businesses with seamless payment options.
PayPal strengthened its payment solution offerings for small businesses by adding new features. The features allow small businesses to accept payments made through PayPal, credit and debit cards, digital wallets, Venmo, PayPal Pay Later and Apple Pay.
The strong monetization efforts of Venmo, robust PayPal Checkout experiences and solid momentum in the company’s buy now pay later solutions remain noteworthy.
We believe PayPal’s growing efforts toward strengthening its product offerings will continue to aid growth in its customer base.
This in turn will likely aid the financial performance of the company, which will instill investor optimism in the stock.
Our model estimate for 2023 net revenues is projected at $29.5 billion, reflecting growth of 7.1% from 2022.
PYPL has lost 11.7% in the year-to-date period against the industry’s growth of 50.5%.
Economic uncertainties and foreign exchange headwinds remain major concerns for the stock.
Zacks Rank & Stocks to Consider
Currently, PayPal carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Asure Software (ASUR - Free Report) and Arista Networks (ANET - Free Report) . While Asure Software sports a Zacks Rank #1 (Strong Buy), Arista Networks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Asure Software shares have gained 23.8% in the year-to-date period. ASUR’s long-term earnings growth rate is currently projected at 27%.
Arista Networks shares have gained 61.9% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 18.75%.