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Why PayPal's CEO Is 'Extremely Confident' In The Company's Business Model

Why PayPal's CEO Is 'Extremely Confident' In The Company's Business Model

  • Shares of Paypal Holdings Inc (NASDAQ: PYPL) have fallen nearly 9 percent since its IPO debut.
  • Bryan Keane of Deutsche Bank maintained a Buy rating and $42 price target following a chat with the company's CEO Dan Schulman.
  • According to the analyst, Schulman was "extremely confident" in the company's business model.
  • Bryan Keane of Deutsche Bank held a fireside chat with PayPal's CEO Dan Schulman, who was "extremely confident" in the company's business model given the "multifaceted growth opportunities" ahead.

    Many Growth Opportunities Ahead

    Keane expanded that PayPal's growth opportunities include adoption of One Touch, triple digit growth at Braintree (expected to surpass $50 billion in processed volume), a large merchant omnichannel strategy, accelerated sign-up of small merchants, international expansion, increased frequency of consumer usage and the upcoming monetization of Venmo later this year or early next year.

    Keane singled out Braintree, noting that it is a "leading mobile payments platform" given its developer-friendly ease of integration, open API format and reduced setup time from days/weeks to hours. Moreover, PayPal expects to take its recently acquired Xoom platform beyond the United States with plans to use more than 35 bank relationships internationally to facilitate further cross border payments.

    Related Link: Bank On PayPal Upside With This ETF

    CEO's Input

    "The CEO believes nothing in the competitive landscape will change the inherent future leverage of the business model," Keane wrote. "Paypal expects take rate to moderate given the push into large merchants where pricing has always been competitive but will be accretive to margins given scale efficiencies."

    Finally, Schulman reiterated the company's mid-term three-year outlook of "stable to growing" margins with "significant leverage inherent in the model" given units of scale on the company's operating expenditure.

    Shares remain Buy rated with an unchanged $42 price target.

    Image Credit: Public Domain

    Posted-In: Braintree Bryan Keane Dan SchulmanAnalyst Color Reiteration Top Stories Analyst Ratings Tech Best of Benzinga


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