PayPal (NASDAQ:PYPL) is focusing on boosting its growth and enhancing profitability by prioritizing the increased adoption of its product offerings. However, the financial technology company continues to face competitive and margin headwinds. Adding to its challenges is Venmo’s recent setback related to its partnership with Amazon (NASDAQ:AMZN). Venmo is a mobile payment service owned by PayPal.
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Let’s dig deeper.
Amazon Cuts Ties with Venmo
Amazon has decided to sever ties with Venmo. In October last year, Amazon announced the integration of Venmo as a payment option during checkout, a feature that was subsequently implemented on the Amazon app and amazon.com. Nevertheless, the e-commerce giant has recently informed users that it will no longer accept Venmo as a payment method starting January 10. Amazon will still accept payments made through Venmo debit and credit cards.
This development represents a setback for PayPal, which is actively working to solidify its relationships with key players in the technology and financial services sectors. The objective is to expand its user base and promote the adoption of its products.
As stated above, PayPal is grappling with heightened competition and facing margin challenges, resulting in downward pressure on its stock price. In response to competitive pressures from tech giant Apple (NASDAQ:AAPL) and financial services company Stripe, PayPal initiated a project called the “Quantum Leap.” This project aims to introduce new features to its digital wallet and online checkout and increase the adoption of its offerings.
In light of these developments, let’s look at the Street’s recommendation for PayPal stock.
Is PayPal Stock Expected to Rise?
PayPal stock has lagged broader markets year-to-date due to margin headwinds, so analysts’ average price target indicates a notable increase in its value over the next 12 months. However, analysts are cautiously optimistic about the company’s prospects.
PayPal has a Moderate Buy consensus rating based on 20 Buy and 14 Hold recommendations. Further, the average PYPL stock price target of $73.13 indicates that it has the potential to rise by 25.05% from current levels.
