PayPal stock price soared sharply after the digital payment platform announced its crypto services on Wednesday, but shares erased all the gains on Thursday. The selloff is blamed on short-term value investor’s strategy of capitalizing on recent gains by selling the stock. PayPal stock currently trades around $203. Its shares rose more than 100% in the past twelve months as virus spread has increased user’s focus towards online platforms.
PayPal launched crypto service in response to Square’s move
PayPal rival Square (NYSE: SQ) has been expanding its crypto services since it first allowed customers to buy and sell Bitcoin in 2018. PayPal, the largest online payment platform, has introduced broader crypto services in response to Square. PayPal plans to allow users to buy, hold, and sell four crypto coins including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. The company also plans to use the crypto service function in its Venmo platform, with the strategy of expanding the service to a few international markets by next year. It plans to permit account holders to use crypto coins as a form of payment at its 26 million merchants. The service is likely to begin in the coming weeks in the US and will expand to more jurisdictions in 2021.
Financial numbers and analysts commentary supports PayPal stock gains
Its second-quarter revenue of $5.26 billion grew 25% from the past year period. In addition, the company has successfully converted revenue growth into big profits. The company’s second-quarter earnings per share of $1.07 grew sharply from previous quarter earnings of 66 cents. The company expects full-year revenue growth in the range of 20% compared to the past year. Analyst’s commentary has also been adding to investor’s sentiments. For instance, KBW analyst Sanjay Sakhrani names PayPal as the best fintech idea for the second half of 2020
