PayPal stock could surge 23% to $300 on its cryptocurrency move, according to this analyst

Is he right?

| More on:
A bitcoin with a chart in the background showing share price movement

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Paypal Holdings Inc (NASDAQ: PYPL) made headlines late last year when the company announced a move into cryptocurrency. One analyst believes that the full measure of that opportunity isn't yet baked into its price and could drive PayPal stock to a new all-time high.

BTIG analyst Mark Palmer upgraded the stock to buy from neutral (hold), saying it would gain traction from its nascent cryptocurrency platform, which could add more than $1 billion in revenue to PayPal's coffers by 2022. 

PayPal is using crypto brokerage Paxos to power its cryptocurrency transactions. The company "has seen its trading volumes rise impressively in recent weeks," according to Palmer. The analyst goes on to posit that "the vast majority" of the increase in trading volume is the result of transactions by PayPal customers.

Late last year, PayPal announced the launch of a service that would allow users to buy, sell, and hold cryptocurrency in their PayPal account. In addition, users could learn about digital currencies and track prices, all without ever leaving the app. 

But that's just the beginning. PayPal will accept cryptocurrency as a payment method beginning this year and plans to extend its crypto service to Venmo users.

Tangential evidence suggests that Palmer is right on the money. Investors need look no further than Square Inc (NYSE: SQ) to get a sense of the opportunity resulting from cryptocurrency transactions. In the third quarter, Square generated total net revenue of $3.03 billion, up 140% year over year, but excluding bitcoin revenue, net revenue was $1.4 billion, up just 25%. That suggests that crypto has effectively doubled Square's net revenue. 

This highlights the massive potential resulting from PayPal's move. Additionally, its stock has doubled over the past year on the accelerating adoption of digital payments, so it isn't far-fetched to think PayPal could gain another 23% in the coming year.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Danny Vena owns shares of PayPal Holdings and Square and has the following options: long January 2022 $75 calls on PayPal Holdings. Danny Vena has no position in any cryptocurrencies mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings and Square and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
International Stock News

Bull vs. bear: Can the S&P 500 keep rising in 2024?

We review the bull and bear case for the S&P 500 this year.

Read more »

woman with coffee on phone with Tesla
International Stock News

Why Tesla stock put pedal to metal today

Tesla's robotaxi is coming in August.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
International Stock News

If you invested $10,000 in Nvidia stock the day ChatGPT came out, this is how much you'd have today

Buying Nvidia when the disruptive AI chatbot launched would have been a smart move.

Read more »

A Tesla car driving along a road at sunset
International Stock News

Why Tesla stock was climbing today

Investors were encouraged by news of a price hike on the Model Y.

Read more »

Plate with coloured wedges being parcelled out like a slice of pie representing a share split
International Stock News

Stock-split watch: Is Nvidia next?

Nvidia last split its stock when it traded for a pre-split $744 in 2021.

Read more »

A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.
International Stock News

1 Wall Street analyst thinks Tesla stock is going to $125. Is it a sell?

Tesla is no longer a magnificent stock, according to a Wells Fargo analyst.

Read more »

A young man goes over his finances and investment portfolio at home.
International Stock News

Is Nvidia stock a buy?

The company's stock could rise 40% over the next two years and outperform the S&P 500.

Read more »

Man with hands in the middle of two items with money bags on them.
International Stock News

Is Nvidia headed for a stock split?

Nvidia stock has split five previous times in the company's history.

Read more »