Like Cryptocurrency? You Should Love PayPal Stock

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Long-term investors like PayPal, too. As we will see, the share price has gone on an incredible upward path during the past year and a half. (See PayPal stock charts on TipRanks)

Some folks might contend that PYPL stock is expensive after such an amazing share-price run-up. Indeed, that argument may have some validity.

On the other hand, the stock’s momentum is undeniable. Moreover, anyone who sees a future for cryptocurrency as part of the payments ecosystem should seriously consider PayPal’s role in this emerging industry.

A Quick Look at PYPL Stock

Admittedly, it would be challenging to describe PYPL stock as a value play in mid-2021.

The stock bottomed out at around $85 back in March of 2020, but then staged an epic rally. Surely, the short sellers ran for cover as PayPal stock soared to a 52-week high of $310.16 on July 26 of this year.

PYPL stock did pull back recently to the $271 area. Yet, this only brought PayPal’s trailing 12-month price-to-earnings ratio down to 66.14, which will still be too high for some value-focused investors.

Furthermore, PayPal doesn’t currently pay a dividend to its shareholders. Due to these considerations, not everyone is going to view PYPL stock favorably.

On the other hand, if you like to “buy the dip” during a strong long-term uptrend, then PYPL stock should be exactly what you’re looking for.

So, if you subscribe to the idea that the “trend is your friend,” then PayPal deserves your attention.

Crypto and Venmo

This should be considered a major news development, but it feels as if the media isn’t paying much attention to it.

Venmo — which is owned by PayPal — is introducing an important new feature, with a cryptocurrency angle.

This is a feature that old-school payment and credit-card companies might not have considered, though it’s entirely possible they will follow in PayPal’s footsteps soon.

Venmo’s new feature — called “Cash Back to Crypto” — will allow the holders of its credit cards to automatically purchase cryptocurrencies with the cash-back earned on their purchases.

It’s probably only a matter of time before traditional finance companies copy this idea – but they can’t take away PayPal’s status as a trailblazer in this area.

A Bold Move

There are a couple of things that should immediately capture investors’ and customers’ attention about Cash Back to Crypto.

For one thing, this feature will enable Venmo’s cardholders to buy not only Bitcoin, but also Ethereum, Litecoin, and even the lesser-known Bitcoin Cash.

Secondly, it’s worth emphasizing that Venmo’s customers won’t be charged fees for the transactions made through its new program.

That’s quite a bold move, if you really think about it. Instead of going for an immediate cash grab, PayPal is willing to forgo today’s profits in order to bring more customers into the fold.

You can decide whether that’s smart or not. If the cash-back feature becomes popular, though, then PayPal could be an early mover in a potentially lucrative niche market.

Wall Street Weighs In

According to TipRanks’ analyst rating consensus, PYPL is a Strong Buy, based on 23 Buy and three Hold ratings. The average PayPal price target is $336.91, implying 24.28% upside potential.

The Takeaway

You may have never really thought of PayPal stock as a cryptocurrency play, until now.

However, if you’re going to invest in PYPL stock, then you’ll need to consider the crypto angle.

That’s not necessarily a bad thing though, as PayPal is setting itself up to be a pioneer in a market with powerful growth potential.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.