Analysts predict PayPal growth through new service Cryptocurrency, as customers show a high demand amid rising prices of cryptocurrencies. This will bring PayPal’s profit growth, when the company will start to charge a fee for the transaction of cryptocurrencies in the next year.
PayPal (PYPL) becomes the largest buyer of new supply of bitcoins, as customers of its new service Cryptocurrency actively buy and sell Bitcoin, and cryptocurrencies such as Ethereum and Litecoin.
On the background of macroeconomic uncertainty and growth in demand for digital currencies from the beginning of 2020 Bitcoin grew by 170%, and Ethereum more than 360%.
From 21 October, when PayPal got a license for the use of cryptocurrency clients, Bitcoin has grown by almost 60% to around $19000. On Monday, the cryptocurrency temporarily exceeded the maximum 2017, reaching a peak of $19 920, and then rolled back.
The shares of PayPal rose more than 100% since the beginning of the year and 16.3% over the last month.
Company Mizuho Securities recently interviewed 380 PayPal users in the United States and found that 17% of them have traded in Bitcoin using your PayPal account. A group of customers who traded cryptocurrency has also demonstrated higher activity, as used the PayPal app more than three times more than others. In addition, 65% of those who traded in Bitcoin through PayPal, said they are willing to use cryptocurrency to purchase goods and services.
Such a demand suggests that the activity of customers PayPal Cryptocurrency will bring the company significant profit growth after 2021 it will start to charge fees in transactions of purchase/sale of cryptocurrency.
Announcing the launch of Cryptocurrency, PayPal, PayPal said that will not charge commissions when buying or selling cryptocurrency to 31 December 2020 to allow it to attract more interested in bitcoin clients. As for storage – PayPal has promised not to charge charge.
Mizuho analyst Dan Dolev said that the inclusion of transaction with Bitcoin can provide PayPal revenue growth of 20% in 2021, above average forecasts of 18.7%.
At the same time, analysts point out that PayPal makes bitcoin, just like its competitor Square (SQ) – after getting the “spread” (difference in price) when buying crypto currencies from brokers and then sell it to customers. PayPal States that charge alleged spread in the amount of 0.50%, but its overall volume of transactions is unclear.
PayPal stated that it “will not separately calculate or disclose the spread, which receives for each transaction.”
Two weeks ago, hedge Fund Pantera Capital announced that, according to him data on the volume of trade Bitcoin, PayPal users collectively buying nearly 70% of all issued Bitcoin since mid-October. It is expected that by the end of the year the turnover of the Bitcoin platform PayPal will be more than $30 billion According to the estimate of Pantera Capital, together Square and PayPal bought about 100% of the newly released Bitcoin.
Square launched a service for buying and storing cryptocurrency in your application Cash in 2018 and this year went further, buying a Bitcoin at $50 billion as an asset for your balance. Bet of the company on Bitcoin was made CEO, Jack Dorsey, and they have partly paid off: revenues from sales of Square Bitcoin in the third quarter was $1.63 billion, which is 618% more than in the third quarter of 2019, and the profit amounted to $32 million (an increase of 1500%).
If PayPal can in a similar way to monetize their 80-90 million customers in the U.S. (PayPal Cryptocurrency is still limited to USA), it will be $250 million, or an additional 1% revenue growth in 2021. The total number of active PayPal users is over 300 million.
