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Home>'Pay with Venmo' optimism sends PayPal to record high

'Pay with Venmo' optimism sends PayPal to record high

'Pay with Venmo' optimism sends PayPal to record high

10/06/2017

By Wallace Witkowski, MarketWatch

Guggenheim's Cantwell sees big potential to monetize Venmo

PayPal Holdings Inc. shares on Thursday hit intraday highs and eyed a record close after an analyst voiced hope for Venmo's expansion from a peer-to-peer payments service to include potentially millions of merchants.

PayPal (PYPL) shares led tech gainers on the S&P 500 index Thursday, rising 2.7% to $65.76 at last check, while the Technology Select Sector SPDR Fund (XLK) advanced 0.9% and the S&P rose 0.5%. A finish for PayPal at the level would be a record high close for the stock, which it last accomplished Sept. 22 with a close at $65.08.

After Venmo Chief Operating Officer Mike Vaughn mentioned a plan in September to broaden the service to merchants, Guggenheim Securities analyst Jeffrey Cantwell ran a consumer survey and found that while 9% of the U.S. population uses Venmo, 64% of respondents said they'd use Venmo as their preferred option to make a purchase from a merchant.

Cantwell noted:

 Pay with Venmo is the first significant step in Venmo's expansion from being a P2P platform to becoming a consumer-merchant platform. A large increase in fee-paying merchants presents a natural monetizing opportunity for Venmo. We expect Venmo will be a powerful revenue engine for PayPal. 

Cantwell said that merchants would have a strong incentive to use Venmo given the platform's social aspect, calling to mind examples like Facebook Inc. (FB), Instagram and Twitter Inc.(TWTR), social media sites that became platforms for merchants to broaden sales.

Read:More social media apps have become payment apps--even Skype (http://www.marketwatch.com/story/why-companies-want-you-to-pay-for-stuff-everywhere-even-skype-2017-08-02)

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