After the release of its peer-to-peer app Venmo, Paypal skeptics were silenced after the app beat expectations in terms of earnings and revenues.
In fact, by Friday last week, PayPal shares had risen by an impressive 9 percent.
Increasing Stock Value
Additionally, the payment and money transaction company’s stock surpassed the $86 threshold. Which is the first time in over a year that its shares have risen by more than 26 percent.
In addition to this, PayPal reported on Thursday that it had hit third-quarter earnings which beat the expectations that were initially predicted by Wall Street analysts. The company also recorded a positive increase in both its fourth-quarter, as well as full-year guidance.
Nevertheless, payment volumes of the company were slightly lower than the predictions that were made.
Initially, Venmo struggled to make a positive impact in PayPal’s bottom line. However, during the third quarter, things seemed to brighten up for the app as payment volumes increased by a whopping 78 percent to total in at $17 billion.
A Positive Direction for Venmo
According to CEO of PayPal Dan Schulman, despite this making only a small fraction of PayPal’s $143 billion volume, it marks a positive step for the app in the right direction.
Additionally, Schulman points out that the app has recorded some tangible growth in its ability to generate money for the company. He believes that the company’s monetization efforts that were geared towards the app are now starting to bear fruit.
Increase in Number of Users
Indeed, roughly 24% of Venmo users have played an active part in a strategy which the CEO dubbed the ‘monetizable’ action.’ This is up from second quarter participation which was at 17 percent, and initially 13 percent in May.
As a matter of fact, PayPal says that more than $1 billion in transactions in instant transfer volume were carried out in September alone on the Venmo platform.
Moreover, PayPal also recorded growth in the number of individuals acquiring its Venmo card, which is a physical debit card that links to one’s PayPal account.
The card was unveiled this summer, and so far, has seen a 320 percent increase in its acquisition between August and September.
PayPal further received some positive news as BTIG on Friday last week elevated the company’s stock from neutral to buy with a price target of $95, informing its clients that the monetization process of Venmo had contributed to the new status,
According to an analyst at BTIG, Mark Palmer, one of the most attractive aspects of Paypal’s 3rd quarter 2018 report was the company’s progress in its monetization of Venmo.
Indeed, it proved to be a vital initiative with regard to increasing the company’s stock valuation as many investors had predicted their subsequent success around this endeavor.
Aims at Monetizing Venmo
According to Chief Financial Officer at PayPal, John Rainey, about a quarter of Venmo users are using the app in a method by which PayPal can capitalize on and monetize.
Rainey divulges that if individuals observe the company’s most recent quarter, one in every four customers in Venmo is using different features of the app such as transferring funds into their account by using the instant cash withdrawal system, using the physical cards in stores, or even shopping online with the app.
That being said, even though Venmo was one of the key pillars to PayPal’s successful quarter, it isn’t the only slice of positive news for the company.
Indeed, the company added over 9.1 million new users to the platform, while further announcing a new agreement with Walmart to offer both withdrawal and deposit services in Walmart stores. Moreover, the company also finalized a partnership with American Express.
Working Towards a Larger Consumer Base
Rainey commented on these new partnerships, sighting that they were instrumental in reeling in more customers to PayPal, which was turning out to be a convenient platform for millions of American users.
In fact, the company currently boasts of over 250 million users worldwide.
Additionally, Rainey says that the company will further concentrate its efforts on the two billion people around the globe without access to legitimate financial services. Services that many individuals take for granted such as checking accounts or banking services.
According to Rainey, the key element that will be important in targeting these individuals is that they possess mobile devices. Hence, they aim to introduce these individuals to the wonders of mobile commerce in the palm of their hands.