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Why Is PayPal (PYPL) Stock Trading At New All-Time High?

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Shares of PayPal (PYPL - Free Report) surged over 2.2% to touch a new all-time high Wednesday on the back of an analyst upgrade and momentum following the slow rollout of its newly redesigned app.

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Jefferies analyst John Hecht upped his price target for PayPal from $100 per share to $110 per share. This new price target marked a 21% upside to PYPL’s closing price of $90.61 on Tuesday. "We believe core P2P and mobile trends - which have been impressive - should be followed more closely alongside the Venmo success," Hecht wrote in a note to clients Wednesday.

The analyst also said that the company will be able to manage its breakup with eBay (EBAY - Free Report) since PayPal has been “growing away from eBay” since it spun off from the online seller in July 2015.

Investors should note that eBay announced that PayPal will no longer be its top payment option after their current deal ends in 2020. Customers will still be able to use PayPal to make purchases on eBay, but it will no longer be prominently featured ahead of debit and credit card options, nor will it process card payments. 

PayPal saw its stock price jump over 2.2% through mid-morning trading to touch a new 52-week and all-time high of $92.94 per share following the Jefferies price target hike.

Redesigned Mobile App

Last week, PayPal announced that will return to its core payment roots on its main mobile app after users appeared annoyed that it had become too crowded and focused more on food ordering and investments. “The most popular feature of the app still remains sending and requesting money – ranging from paying someone back, covering a portion of a bill, sending a gift, or buying something from a casual seller,” PayPal wrote in a statement.

“We are making the app simpler to use and making it even easier for our customers to send and request money.”

The updated PayPal app is set to make it easier for users to send and move money, view their balances, and get notifications. PayPal added the send and receive money buttons to the home screen. The firm also simplified the process of adding photos and importing contacts so there is less worry about sending money to the wrong people.  

PayPal’s redesigned app is currently available to Android users in Australia, Italy, and a few other markets. The company is set to roll out an iOS version and introduce the updated app in more markets, which includes the U.S., “over the coming weeks.”

Performance

Shares of PYPL are up roughly 165% over the last three years, which crushes its industry’s 75% climb and the S&P 500’s 47% gain. Even though PayPal stock has cooled down over the last six month, its outsized growth has continued over the last two years. Plus, the payment giant has seen its stock price surge 13% in the last month.

 

Overview

PayPal currently operates a variety of financial services and has grown through a series of acquisitions that include the widely popular millennial-focused, peer-to-peer payment platform Venmo. PayPal has also made some acquisitions this year, which include its June purchase of Hyperwallet for roughly $400 million to help it expand its global payout capabilities. PayPal acquired fraud prevention and risk management firm Simility for $120 million in cash that same month.

These purchases followed the firm’s $2.2 billion May acquisition of small business commerce platform iZettle, which operates mostly in Europe and Latin America. Venmo has also landed partnerships with Uber and Grubhub (GRUB - Free Report) in its battle with Square’s (SQ - Free Report) Cash App, JPMorgan Chase’s (JPM - Free Report) QuickPay—and don’t forget about Apple (AAPL - Free Report) and Google (GOOGL - Free Report) Pay.

PayPal’s Q2 revenues surged 25% to hit $3.86 billion in the second quarter, which also topped our Zacks Consensus Estimate.

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