Tag Archives: PYPL

Can Alexa Take on Venmo?

Venmo, the person-to-person payment app owned by PayPal (NASDAQ:PYPL), has been the payment provider’s rising star since it was acquired along with Braintree in 2013. Venmo is extremely popular with millennials, who find the app particularly useful for splitting shared costs like a restaurant bill, rent, and utilities. The app has become so popular it has achieved verb status, with younger users saying, “just Venmo me.”

Last year, Venmo’s payment volume increased 97% year over year to $35 billion.That success has attracted a wide variety of potential competitors, the most notable beingSquare Cash, Apple Pay Cash, and Zelle, a payment method floated by a consortium of 30 major U.S. banks.

While each of these offerings made inroads, Venmo’s biggest challenge may be yet to come.

The Venmo app on a smartphone with Chinese takeout in the background.

Amazon is on the hunt, with Venmo in the cross hairs. Image source: PayPal.

The big leagues

E-commerce juggernaut Amazon.com(NASDAQ:AMZN) is reportedly mulling a person-to-person payment feature using its Alexa-powered smart devices as a starting point, according to a report in The Wall Street Journal (paywall). The company is considering a number of options that would allow customers to send money to friends using its digital assistant, which acts as the software to the Echo’s hardware.

If true, this would be the latest move by Amazon to enter the realm of personal finance. After initially adding a store-branded credit card, the company has expanded its initiatives to include its own digital wallet — Amazon Pay. The company has since introduced the Amazon Payment Global Partner Program, which allows online merchants to offer Pay with Amazon at checkout.The company has also been in talks with big banks to offer its customers a checking account-like product.

The voice-activated Echo has proven to be a boon to Amazon. Customers that own the smart speaker spend 66% more, on average, than those without the device.Amazon claims that subscribers to its unlimited streaming music service have doubled in the past six months, driven by two interrelated factors: the expanding number of members of it Prime loyalty program and the exploding popularity of voice-activated Echo smart speaker.The ability to send payments could make the device even more useful to its customers.

White Amazon Echo Dot on a table next to house keys.

Is Alexa a match for Venmo? Image source: Amazon.

PayPal has cracked the code

While the popularity of the platform among younger customers is undisputed, there were no charges to users for their peer-to-peer transactions — so until recently, PayPal hadn’t made any money from Venmo. That changed late last year when PayPal rolled out Pay with Venmo, which allowed its users to pay merchants using the Venmo app. Merchants accepting the payment method will pay the standard transaction fee to PayPal, which will provide the company with a largely untapped revenue stream.

The amalgamation of payment service and communal platform has captivated millennials, who have grown up in the era of social media. The ability to transfer money, include payment descriptions, and top it off with an emoji may seem frivolous to older consumers, but the intersection of financial utility and social interaction make it a perfect fit for younger users. This combination, and the entrenched nature of the app among friends, is part of the appeal for these consumers, and why it will be difficult to unseat Venmo as the app of choice — at least for now.

Two hands holding a smartphone typing a message into the Venmo app.

Millennials prefer the social aspect of Venmo to other payment apps. Image source: PayPal.

David and Goliath

While Amazon has been enormously successful in many of its endeavors, the company isn’t invincible. If you have any doubts, consider the company’s foray into smartphones, the Fire Phone, which is likely Amazon’s biggest flop to date. The devices were so unpopular that the company took a $170 million charge for the unsold phones just three months after they debuted.

Another great example is Shopify Inc.,an e-commerce company that helps small- and medium-sized businesses set up and manage an online store. After competing for a time using its Webstore platform, Amazon shuttered that business and threw its support behind its former competitor, sending its users to Shopify.

It’s also worth noting that Amazon debuted a similar payment service back in 2007 called WebPay, which allowed customers to send money to friends for free — sound familiar? That service failed to catch on, and the company discontinued it in 2014.

For now, this is merely supposition and rumors. Amazon could introduce a competing payment service, but even if it does, there are no guarantees it will succeed.While the situation certainly bears watching, I don’t think PayPal investors having anything to worry about — at least not for the foreseeable future.

Dont Worry: The Square Inc Stock Rally Is the Real Deal

In today’s market, Square Inc (NYSE:SQ) is an anomaly: a technology firm that’s performing very well. On a year-to-date basis, Square stock is up nearly 42%, a resounding triumph amid a sea of disappointment. In contrast, competitors in the payment apps industry, such as Paypal Holdings Inc (NASDAQ:PYPL) and Apple Inc. (NASDAQ:AAPL), are decidedly muted.

Naturally, investors wonder if such momentum can last. I’m cautiously optimistic that it will. Unlike Apple, which has multiple and disparate businesses, SQ stock is a substantially more focused investment. And while PayPal is the dominant player in the online payment app arena, Square has the edge in providing a comprehensive solution for small businesses.

Of course, I don’t want to discount the pain in the broader markets, which has negatively impacted Square stock. For instance, the entire tech sector softened from mid-March due to several pessimistic catalysts, most notably the Tesla Inc (NASDAQ:TSLA) and Uber driverless technology controversies. In Square’s case, shares are down nearly 15% since the March 20 close.

At the same time, investors pushed up SQ stock for a reason. In fact, every indicator existed to run away from the markets, even from solid names. That just didn’t happen for SQ, which tells me that the positives outweigh the negatives.

Importantly, it’s not speculative optimism after which Wall Street chases. Small business sentiment is one of the bright spots this year, with entrepreneurs expecting more revenues and growth opportunities. Also, they’re reporting less difficulty in obtaining financing.

Naturally, this rising trend is a big boost for Square stock. But I’m even more intrigued with the finer details.

Square Stock Deserves Its Winning Ways

As I mentioned previously, the biggest advantage to using Square is its comprehensive platform. For signing up, you get a free credit card reader, which makes in-person transactions a snap. Along with that, you receive inventory management programs, as well as other administrative applications. It’s easily the best choice if you run a traditional business.

While rival PayPal maintains the edge for online businesses, the reality is that older generations are more entrepreneurial. small business owner demographics, Square stockinvestorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock-768×487.jpg 768w, investorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock-200×127.jpg 200w, investorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock-400×254.jpg 400w, investorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock-116×74.jpg 116w,https://investorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock-100×63.jpg 100w, investorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock-197×125.jpg 197w, investorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock-79×50.jpg 79w, investorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock-78×49.jpg 78w, investorplace.com/wp-content/uploads/2018/04/business-owners-demographic-Square-stock.jpg 956w” sizes=”(max-width: 300px) 100vw, 300px” />Sure, the hoodie-wearing hipster is the commonly portrayed image of the modern business owner. But the actual statistics state that 33% of small business owners are between 50 to 59 years old. Hoodie-wearers, or those between 18 and 29, represent a mere 4%.

It’s not much of a stretch to assume that older business owners prefer SQ. After all, these are folks that actually want to talk to their customers – not text them emojis. Square has the tools, comprehensiveness, and simplicity that most small entrepreneurs crave. We shouldn’t be surprised, then, how dominant Square stock is in the markets.

Also unsurprising is that in-person or traditional businesses are rapidly adopting mobile payment apps. According to an October 2017 survey, small business owners were more likely to integrate in-person mobile payments than they were to integrate online payment processing platforms.

This trend contradicts the common perception that companies are exclusively focusing on the online experience. Since most small business owners are older, Square has a much more viable market than analysts give them credit for. Again, chalk that up as a win for SQ stock.

Technicals Confirm the Fundamentals

Sometimes, we encounter situations where a fundamentally sound company experiences market distress. Perhaps investors haven’t quite digested the organization’s true potential, and share prices lag as a result. This is not at all the case with SQ stock.

Since the early summer of 2016, SQ has formed a consistently rising bullish trend channel. In addition, the 50 day moving average has supported the overall price action. I expect this trend to hold up, especially because the fundamentals are so strong.

With that said, my main caveat is the broader market weakness. It could continue to pressure even solid companies with great fundamentals, which is why I’m not completely gung-ho.

Ultimately, though, the longer-term picture is what you want to focus on. Consider initiating a small position in Square stock now, and start building up should prices decline. In a year or two from now, you’ll be glad you did.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

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Where Is Paypal Holdings Inc Stock Headed? Just Look at the Blockchain!

As I’m sure my readers have figured out from my cryptocurrency articles, I’m not the stock market’s “fanboy”. However, some companies truly pique my interest. Paypal Holdings Inc (NASDAQ:PYPL) is one of them. With its powerful hold on the sharply rising digital payments industry, Paypal stock is a no-brainer investment.

For starters, the Wall Street-friendly digital wallet is performing extraordinarily well out the gate.

Yes, it’s way too early to start prognosticating 2018 performance based on a few trading days. However, it’s also a fact that Paypal stock is up over 7% year-to-date. That bullishness simply can’t be ignored and, more importantly, it’s only the beginning.

PYPL is really one of the few elite companies that is virtually guaranteed an upward growth curve. We talk often about the Internet of Things. IoT is a catch-all term to describe the integration of smart devices into our daily lives. Think what you want about it, but IoT is happening — and will continue to happen. You can either adapt or you can die.

In a similar vein, digitalization of financial transactions is both the present and the future. I’m not just referring to the blockchain and cryptocurrency phenomenon. Rather, we can look at the topic mundanely. When was the last time you conducted a transaction in cash?

From what I can gather, the only time kids use cash today is at old school pizza joints and for their “pharmaceutical representative” at a poorly lit intersection.

Still, I understand the hesitation to buy Paypal stock right now. I loved PYPL early on, back in December 2015. Since my initial write-up on the company, it’s soared over 119%. Surely, the valuation is stretched at this point?

People Are Embracing Digital Payments

I can’t imagine anyone preferring to buy a publicly traded company when it’s already enjoyed a tremendous rally. But, on the other side of the coin, I’m sure many people questioned Amazon.com, Inc. (NASDAQ:AMZN) at $700. Today, those “questionable” shares have nearly reached $1,250.

Moving forward, investors can trust Paypal stock. Based on the company’s most recent third-quarter earnings report, the bullish thesis hasn’t changed a lick. PYPL has yet to outright disappoint investors in its quarterly reports and Q3 was no different.

As InvestorPlace‘s Karl Utermohlen noted: “One of the strongest segments of the quarter for PayPal was Venmo, the popular payment method where you can transfer money to friends and family at the click of a button. The business processed $9 billion in payments in the quarter, twice as much as in the year-ago period.”

The takeaway here is that an investment in Paypal stock isn’t just about payment services for small businesses. Yes, that’s an important component, but digital payments are being incorporated everywhere. This is no clearer evidence than in the current dynamics surrounding cryptocurrencies.

At the time of this writing, all cryptocurrencies are worth over $750 billion. However, bitcoin’s market share has deflated from 100% at the beginning of the journey to 34.3% today. Many reasons exist why this is the case, but a significant factor is practicality. Long story short, bitcoin can’t scale up to its current demand.

Right now, bitcoin is traded as a store of wealth, which is perfectly fine. But does that explain the reasoning for the other 1,385 cryptocurrencies? No. For instance, the offshoot bitcoin currencies market themselves as the faster, more efficient version of blockchain, not the better store of wealth.

In other words, people are participating in the blockchain for its functionality, not just its profitability.

Don’t Overthink Paypal Stock

Investors shouldn’t overanalyze Paypal stock. Businesses spend years attempting to spark demand; rarely does demand come to them. But in PYPL’s case, the public is hungry for the payment revolution.

The beautiful aspect working in the company’s favor is consumer sophistication. As we see with the enormous crypto diversity, you can no longer have people by solely highlighting blockchain. People must have a compelling reason to use or invest in the product.

For Paypal, its competitive advantage is its years of experience in the digital payment sphere. Through its time under eBay Inc (NASDAQ:EBAY), and on its own, Paypal has amassed a perhaps insurmountable moat.

Finally, the cryptocurrency craze is unlikely to negatively impact Paypal stock. Although the blockchain is a groundbreaking innovation, many people prefer the security of major institutional backing. Naturally, consumers trust the Paypal brand name, and the company provides many of the services offered in blockchain platforms.

As of this writing, Josh Enomoto is long bitcoin and bitcoin cash.

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Apple Inc. Stock Will Surely Benefit From This Tailwind In 2018

Apple Inc. Stock Might Benefit Big Time From This Tailwind In 2018
flickr

We are in the last month of 2017, and, investors and analysts are already talking what about could be the key drivers of Tim Cook led Apple Inc. (NASDAQ:AAPL) stock next year. Apple stock has had a great outing in 2017 with more than 46% gains in the year-to-date. Now, shareholders are looking forward to what’s in store for AAPL stock in 2018. Wall Street is betting on the much talked about iPhone supercycle driven mainly by the iPhone X sales to be the key driver of the Cupertino, California-based company shares in 2018. Investors would be hoping that for Apple stock to breach the psychologically important $200 mark is just a matter of time. Well, coming to growth catalystsfor AAPL stock in 2018, iPhone Supercycle Or Not, whether iPhone X turns out to be a mega hit or not, Apple Inc’s service segment could be a big growth catalyst. Here’s Why.AAPL stock chart

Services segment outlook looks bright in 2018.

We at Amigobulls in our past coverage had highlighted several times how Apple’s Service’s segment, which is already the size of a Fortune 100 company, contributing to the company’s growth.The services segment includes revenue from AppleMusic, AppleCare, Apple Pay, app store, licensing and other serviceshas grown at a CAGR of over 23% in the last 5 years. Now, if you go by 2018 predictions of analytics company App Annie, then the services segment of the tech behemoth is likely to have another stellar year. According toApp Annie’sTop Predictions for the App Economy in 2018, the worldwide consumer spends across all mobile app stores including Apple app store and Android app stores will grow approximately 30% year over year to exceed $110 billion in 2018.

The report also suggests that China will continue to leadapp store consumer spend in 2018. This is really good news for Apple services segment, as,China also happens to be the top market for iOS App Store consumer spend. Despite recent negativesentiment due to removal certain apps from the iOS App Store in China, the consumer spending should continue to be strong in 2018 as well. With app store revenue contributing a significantportion of the services revenues, this report forecast really bodes well for Apple stock.

apple services revenue

Augmented Reality (AR) could give a big boost to App store revenues in 2018.

App Annie’s report also predicts thatAugmented Reality (AR) will put forward a giant step in realizing its massive potential in 2018. Apple’s ARkit is considered to be one of the major leading drivers of AR coming to life next year. Another recent report fromARtillry, an immersive-technology research company suggests that the enterprise AR market will jump to $47.7 billion in 2021 from $829 million in 2016 while consumer AR will reach $15.8 billion in 2021 from $975 million in 2016. Well, 2018 is believed to be the year when AR starts catching up with consumers as well. From September 2017 only, according to App Annie data, there has been a drastic risein iPhone app downloads for the top ranking apps by Augmented Reality app store search. Apple is the only company which has more than 500 million devices that support AR via its ARKit, iOS 11. All these forecasts are very favorable for the tech giant’s services segment’s prospects in the coming year.

downloads top AR apps

Apple stock looks good for 2018 as well.

We have remained bullish on Apple stock for a while now and we believe that AAPL stock looks good for 2018 as well.Apple stock has been part ofour top stocks to buyportfolio (which has outperformed the Nasdaq Composite by over 130%) forseveral quarters. Coming to the services segment tailwind, it’s not just the growth of the service segment, but also thestrong marginswhich will be key to driving Apple stock higher from here. A Piper Jaffray study estimates that the services segment has a gross margin of around 60%. Apple Pay and Apple music are also showing strong growth. A recent report suggested Apple pay has even bettered Paypal (NASDAQ:PYPL) to become the most accepted alternative payment method in terms of retail acceptance in North America. All the trends look very good for the company’s services segment. With the strong growth prospects ahead, the tech giant could achieve Tim Cooks target of doubling services revenues by 2020 even much earlier. iPhone X hit or miss, Apple stock could benefit big time from the services segment tailwind in 2018.

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