Should You Invest in PayPal?

PHOTO CREDIT: PayPal

OVERVIEW

PayPal Holdings Incorporation is a digital payment company. It handles transactions between consumers and merchants around the world. It operates under several brands like Venmo and PayPal.

Why You Should?

1. PayPal has seen strong growth. It is at the forefront of the digital payment space and this definitely gives it a boost from its competitors as consumers and merchants would use PayPal over other methods. PayPal has acquired several other company’s and has expanded into most countries around the world. This allows the company to develop a customer base that will benefit it in the future.
2. The company has seen strong demand for its products both in the U.S. and abroad. Younger consumers are using more digital payment software which will benefit the leader in the industry, PayPal.
3. The COVID-19 Pandemic has greatly benefited the company. PayPal offers a payment solutions method. Merchants need this more than ever as they transfer their business online. Consumers also need this because they need to purchase more goods online. This trend leads to a spike in demand which benefits PayPal.
4. The company has extremely strong financials due to this rise in demand and other factors that have led to a rise in revenues and profits. The company has seen these metrics rise over the past couple of financial years. This helps the company further grow and help it through tough times. In the financial year of 2019, the company reported revenues of around 17.8 billion and profits of around 2.5 billion. Both these metrics grew from 2018 when the company reported revenues of around 15.5 billion and profits of around 2.1 billion.

PHOTO CREDIT: Yahoo Finance

Why You Should Not?

1. PayPal benefits from a strong economic atmosphere where people have money to spend. However, this pandemic has weakened the economy and people are now cash-strapped. This will not benefit the company’s digital payment platform.
2. PayPal faces competition from banks like Wells Fargo and Capital One. These banks already have mobile payment apps that directly competed with the products that PayPal offers. Other companies like Square and Visa also compete with PayPal over offering a payment method to merchants and consumers. Other companies like Apple and Amazon are entering this space.
3. PayPal will get hit hard with current tensions with China. China is a fast-growing market for the company and if the government bans PayPal services, it will be a tough loss for them.

MY OPINION

In my opinion, I think that PayPal is a great long term investment due to the rise in demand and popularity for their products. However, tensions with China and increasing competition might hurt the company in the future.