UPDATE: 'Pay with Venmo' optimism sends PayPal to record high
By Wallace Witkowski, MarketWatch
Guggenheim's Cantwell sees big potential to monetize Venmo
PayPal Holdings Inc. shares on Thursday hit an all-time intraday high and closed at a record 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, closing up 2.8% at $65.82, after reaching an all-time intraday high of $66, while the Technology Select Sector SPDR Fund (XLK) advanced 1% and the S&P rose 0.6%. Previously, PayPal's highest close was $65.08 on Sept. 22. For the year, PayPal shares are up nearly 67%, while the S&P 500 is up 14%.
After Venmo Chief Operating Officer Mike Vaughan 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.
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)