PayPal (PYPL) is ready to reignite some investor enthusiasm into its stock thanks to its new advertising platform.
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Ahead of the group’s first investor day under new chief executive Alex Chriss, four-star TipRanks-rated analyst Dan Dolev of Mizuho said that “any upside generated by non-payments initiatives such as advertising could be a potential positive catalyst.” Dolev has an Outperform rating on the stock and a $96 price target. Dolev estimates that the successful deployment of PYPL’s advertising strategy across branded checkout and Venmo could drive between 5% and 10% potential upside to total revenues. PayPal Ads was formally launched last October.
Following In Uber’s Path
Much of that confidence is based on the hire in May last year of Uber’s (UBER) advertising business head Mark Grether. He led the creation of its ad platform where he grew revenue to over $1 billion with over 500,000 advertisers around the globe. “We believe PYPL is well-positioned as there are few companies with similar scale and data. It has over 400 million active accounts and over 35 million merchants,” Dolev explained. “As Grether has said if you’re someone who’s buying products on the web, PayPal knows who is buying the products where, and it can leverage that data.”
Since Chriss joined in late 2023 PayPal’s stock has performed strongly up 33% over the last 12 months. Year to date, however, it is down nearly 10%. That’s despite recently posting forecast-busting Q4 revenues of $8.37 billion, up 4.2% on the previous year. Earnings per share reached $1.19, beating forecasts of $0.07. However, investors remain concerned about lethargic growth at branded checkout and competition from Apple (AAPL) product Apple Pay.
Is PYPL a Good Stock to Buy?
On TipRanks, PYPL has a Moderate Buy consensus based on 16 Buy and 3 Hold ratings. Its highest price target is $125. PYPL stock’s consensus price target is $96.92 implying an 24.61% upside.
