PayPal (NASDAQ:PYPL) has given evidence, a real use of digital currencies, by making a transaction using its own stablecoin PYUSD for the first time. On September 23rd, PayPal made a payment to Ernst & Young LLP by using PYUSD to pay an invoice and they agreed to receive the payment but the specific amount was undisclosed.
As a pioneer of digital payments, the deal demonstrated very well the possible use of stablecoins in the real world and how digital currencies can be implemented into a number of business procedures. It is just a starting point of the early adoption of PayPal’s stablecoin and maybe other digital assets in business settings. Here are some opportunities and strengths of PayPal that you might want to consider.
Opportunities
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Network Advantage: PayPal has more than 400 million of active accounts globally and 35 million of merchant partnerships.
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Strategic Partnerships: The growing the Buy with Prime checkout is a flagship achievement for PayPal’s Branded Checkout initiative.
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Monetization on the Rise: Thus, the growing popularity of Venmo has resulted in the growth of monetization and, therefore, a positive effect on PayPal’s gross profit.
Threats
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Competitive Pressure: Market share, competitive pricing in unbranded processing are leading causes of concern, low priced commoditized e-commerce impacting its stock price.
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Growth Concerns: The second half of the current financial year is forecasted to experience a minor deceleration in the growth of both branded and Braintree volume.
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Margin Dilution: Amazon is a direct competitor and hence cooperating with them will exert pressure on PayPal’s product gross margins. This is something very difficult given the current investor focus on the downward trend of gross margin for the company.
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This article first appeared on GuruFocus.
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