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important point
- As of Black Friday, you can use Venmo on US Amazon purchases
- PayPal’s stock price jumped 7% after news of the new deal. The company is expected to announce third quarter earnings shortly.
- Venmo currently has about 90 million users, and with its growing reach, the app is expected to become even more popular.
Venmo has always had more to do than split dinner bills and send money to friends. Amazon customers in the US can now use their Venmo account to make purchases on the e-commerce platform. PayPal owns her Venmo, so this is a great opportunity for the digital payment processing platform to add new users and boost revenue.
PayPal’s stock has fallen more than 50% this year, but the partnership is expected to boost earnings and lead to a profitable quarter.
What does this Amazon Venmo deal mean for PayPal?
Amazon Announces Accepting Venmo Payments
Many of us started using Venmo for its peer-to-peer functionality because it was an easy way to send money to friends. Venmo recently added more features and many online retailers such as Shopify and Lululemon now accept Venmo payments.
Our agreement with Amazon Venmo allows you to make purchases on our e-commerce platform using your Venmo account. The early rollout of the Venmo checkout option began on his October 25th. This will give Amazon one month to work out the issue before the full-scale rollout on his Black Friday, which falls on November 25th of this year.
PayPal’s press release showed how easy this process was for customers. Simply add your Venmo account when you select your payment method during the checkout process.
In more positive news, both companies confirm that customers are protected by Amazon’s A-to-z Guarantee, and eligible purchases are also covered by Venmo Purchase Protection.
Amazon is reportedly responsible for 30% of all e-commerce transactions in the US, so this added exposure is expected to encourage more people to switch to Venmo. It remains to be seen how users will interact with Venmo and Amazon, but it is possible that they will share purchases on the platform with friends and family. This is not a feature Amazon plans to include, but it could be since Venmo became popular for its peer-to-peer usage.
What does this Venmo deal mean for PayPal shares?
PayPal’s stock started at $84.55 the week before announcing an Amazon Venmo partnership the next day. The stock was up 7% for him and after closing at $89.24, he was back at $86.25 by the end of the week. It’s worth noting that as of the close of trading on Nov. 4, PayPal’s stock has fallen to $75.18 (61.43%) year-to-date in 2022. Many analysts are concerned about how much the stock has fallen.
When PayPal releases earnings reports, the company has two types of earnings.
- transaction revenue. This includes fees paid by merchants and consumers for transactions on the platform. Commissions are usually percentages, so large purchases can cost a lot.
- Other value-added services. The company has partnerships, referral fees, subscription fees, gateway fees, and other services it provides to merchants and consumers.
The new partnership should help PayPal improve its bottom line, as the company relies on transactional revenue. PayPal is a popular digital payment service platform known worldwide for processing transactions. When consumers spend more during the holiday season, this is positive news for PayPal’s revenue. Also, some consumers may be more likely to spend money on Amazon now that they can use his Venmo account instead of a credit card.
What’s Next for PayPal Stock?
PayPal’s stock price briefly rose from this positive news, but with everything going on in the economy, we can’t ignore how much the stock will fall in 2022.
There are a few things you should know about the future of PayPal stock.
paypal earnings
PayPal announces third quarter earnings results. Earnings per share were $1.08, beating expectations of 96 cents per share. Earnings also exceeded expectations, well above initial estimates at $6.85 billion, and adjusted earnings were also where he was expected to be at $6.82 billion.
So why are stocks falling? Paypal adjusted its fourth-quarter earnings from $7.74 billion to $7.38 billion to $360 million. Venmo’s growth should create more users, and Paypal expects to add 8 million to 10 million net new users in its 2022 fiscal year.
In its last earnings report, PayPal announced that it added nearly 400,000 new active accounts in the second quarter ending June 30. This brought the account user up to 429 million active accounts, of which about 90 million were his Venmo accounts.
We need to see if this Amazon partnership means that more people will decide to use Venmo now that they can use their accounts on big e-commerce platforms like Amazon. There is.
PayPal’s cost-cutting measures should improve profitability
In its last earnings call, PayPal said it would cut costs in response to its first unprofitable quarter since 2014. With layoffs, real estate consolidations, and project delays, PayPal expects he will save $900 million and $1.3 billion in 2023.
It’s also important to note that PayPal has confirmed that hedge fund Elliott Management has invested $2 billion in the company, and that both parties have entered into an information-sharing agreement to increase shareholder value. Many analysts say hedge fund activist investors’ acquisition of PayPal will force management to make improving profit margins a priority as the company struggles in a post-pandemic world. I feel
We’ll have to see how the economy reacts to rate hikes
Inflation is still soaring, and the most aggressive rate hike campaign in decades continues. The Fed said he plans to make an announcement on interest rate trends on November 2nd. As we’ve seen throughout the year, the stock market reacts poorly to these rate hikes. Because when there’s economic uncertainty, there’s a stock market crash that affects almost every company.
Inflation is also affecting how people spend their money as the economy threatens to slip into recession. We need to see how macroeconomic factors affect PayPal and Amazon. If consumers are slowing spending on e-commerce platforms due to recession fears, this won’t be as significant a partnership as the two companies envisioned.
How should I invest?
With the holidays approaching, it may be tempting to invest in companies like PayPal and Amazon, but there’s still a lot of uncertainty in the stock market and a recession looming. And we don’t know how consumer spending will change this holiday season. I don’t know how people will react to rapid inflation when it’s time to spend money on gifts.
If you still want to invest during times of high inflation and overall market uncertainty, we recommend that you consider Q.ai’s Inflation Kit to protect your investment. Regardless of the industry you invest in, you can activate Portfolio Protection at any time to protect your profits and reduce your losses.
Conclusion
The Amazon Venmo partnership is mutually beneficial for all parties involved as it provides more options for purchasing on the e-commerce platform. If PayPal can cut costs while increasing revenue, the company should be profitable. It’s also important to remember that the outcome of this new Amazon Venmo deal won’t be revealed until 2023.
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