PayPal Shares Soar 9% After the Success of Venmo App
PayPal-owned peer-to-peer mobile payment app, Venmo, is growing faster than ever and it has sent its parent company’s shares soaring 9 per cent after the third quarter earnings report showed unexpectedly higher revenues
PayPal Q3 Earnings
The payment giant’s stock is up 26 per cent in comparison to last year and shares hit an impressive $86 after it revealed third quarter earnings on Thursday, reporting higher revenues than Wall Street’s expectations. Even though PayPal’s payment volumes weren’t as high as expected, the company has raised its profit estimation for the fourth quarter even higher.
Its mobile payment app, Venmo has had a particularly good quarter after failing to turn profits for past few years. The service generated over $17 billion, and experienced 78 per cent growth in its payment volume, which was an encouraging sign for its parent company, even though the amount is only a fraction of PayPal’s total payment volume of $143 billion.
Dan Schulman, the CEO of PayPal, told analysts over a conference call that the social app has a lot of potential for tangible growth and return even higher profits in the future. After a whopping 78 per cent growth in just a year, the company’s monetization efforts are finally ‘reaching a tipping point’, the CEO added. So far, the app has been able to take ‘monetizable action’ on over 24 per cent users. The figure was only 17 per cent in the second quarter and 13 per cent in the first. In just a month, the company was able to generate instant transaction volume of $1 billion in Venmo.
Venmo Monetization Process
Earlier this year, PayPal unveiled a physical debit card that can be linked to Venmo and used to make payments in restaurants, hotels and retail shops. Schulman revealed that the Venmo card experienced almost 320 per cent month-over-month growth in September.
The number of active users on Venmo’s mobile and web apps also jumped up to 185 per cent in the same month. The CEO added that transaction activity for services like Uber and Uber Eats also soared by a whopping 300 per cent from August to September.
BTIG wrote a note to clients on Friday saying that Venmo monetization process could bring up the company’s share prices even more in the fourth quarter. The capital marketing firm also increased PayPal’s price target to $95, upgrading its stock from neutral to buy. Analyst Mark Palmer from BTIG said that the most interesting aspect of PayPal’s third quarter earnings report was how much progress Venmo had made in just three months, eventually leading to a 9 per cent increase in the company’s share prices.
In 2012 Venmo caught the attention of e-commerce company, Braintree, which saw potential in the personal finance platform and acquired it for $26.2 million. Just a year later, Venmo was sold once again, this time to the payment giant PayPal for $800 million.
Ever since, it has become one of the fastest growing mobile app in the United States for sharing money with friends and family. The company went a step further this year and announced a partnership with Mastercard MA to come up with its own debit card and generate even more money from Venmo.
PayPal’s decision to launch a debit card wasn’t just big news for the company but also for Venmo users who were able to make purchases even more conveniently anywhere in the country.
The move was surprising to say the least considering Venmo’s main goal in 2009 to move transactions from plastic to online – only to return to plastic 9 years later. But considering the competition Venmo faces from social media companies and international banks, it make it almost necessary to bring back the debit card to acquire more customers and increase transaction volumes.
More in Business
Hacks That Will Help Reduce Your Gym Membership Expenses
Do Not Pay The Requisite Initiation Fee Automatically Tom Holland who was once a gym owner and also the author of...January 15, 2019
SpaceX Announces Plans To Trim Its Workforce By 10 Percent
A spokeswoman of SpaceX recently told a media outlet that the company has plans to trim its workforce. The company which...January 14, 2019
This Is What Your Health Insurance Provider May Not Be Telling You
Some people know exactly how important it is to have health insurance, but there are still millions of people in the...January 14, 2019
Uber’s IPO Filing Will Affect Their Drivers And Consumers Badly
For decades now, taking a taxi or carpooling on your way to work, school, or literally in every anywhere you wish...January 14, 2019
Here’s Why Envisioning Retirement is a Good Idea
Aging is part of being human, it is just absolutely inevitable. This is actually one of the most important things that...January 14, 2019
Couple Makes $2,000 From Paying Mortgage With Their Credit Cards
Couple’s wise mortgage strategy An ordinary card owner may not be as brave as this couple, because they got the opportunity...January 14, 2019
Medicare Is Offically Letting People Have A Do-Over Until March
Healthcare has got to be the most important thing that everyone must prioritize in their lifetime. Everyone wants to have that...January 14, 2019
Top Ways to Make Your Money and Savings Grow
Everyone wants to save money. Whether you’re planning for a grand European vacation, buying that dream house, saving for your kid’s...January 14, 2019
Study Reveals That Debt Repayment Isn’t A Top Priority For Most Millennials
A study by Northwestern Mutual found that Millennials have debts totaling an average of $36,000 and they spend nearly 34% of...January 14, 2019