Dan Dolev, an analyst for Mizuho, maintained his “Buy” rating on PayPal shares, setting a revised price target of $72 per share, down from a previous target of $92.

Dolev is particularly bullish on PayPal’s future growth prospects due to the potential to merge PayPal and Venmo platforms, creating a truly global digital wallet service. Dolev feels this potential should ease investor concerns over PayPal losing some of its market share to Apple Pay.

PayPal is certainly a hugely versatile payment platform, providing a much-needed layer of protection between consumers’ bank accounts and the digital interfaces they interact with daily. Today, PayPal is offered across most e-commerce platforms. More recently, it’s been offered for big-ticket purchases like airline tickets with US-based carrier Avelo Airlines. It’s also been added to vending and laundry machines for use within the PayRange wallet. PayPal is also an acceptable deposit method with many of the leading online poker rooms in North America. In fact, those looking to play poker in Ontario can deposit using PayPal with three of the top five operators licensed to serve in the Heartland Province.

The rollercoaster ride that is the PayPal share price

It’s been a turbulent time for investors in PayPal though. Although the digital wallet enjoyed a boom period during the pandemic due to an almost overnight rise in e-commerce transactions coupled with the continued shift from cash to digital transactions, PayPal shares have retracted just as quickly in the last 18 months.

After reaching highs of more than $300 per share, PayPal shares plunged to just $71.40 within the space of 12 months to July 2022. There was a general feeling that the initial boom was unsustainable, and cracks had already started to show in PayPal’s armor before this. eBay, the former parent company of PayPal, opted to name Adyen as its preferred payment platform, which was a kick in the teeth for PayPal’s growth. Furthermore, growing competition in the digital wallet space, coupled with a return to spending habits post-pandemic meant the platform risked being left out of focus.

There’s cause for optimism with PayPal’s new approach

In the last 12 months, senior management has led a seismic shift in strategy, preferring to extract maximum revenue from existing users as opposed to spending more on adding to its customer base. The result is that transactions per active account (TPA) rose by 13% year-on-year and payment volumes are also up more than 15% year-on-year.

The appointment of Alex Chriss as the new CEO to replace the outgoing Dan Schulmann appears to have gone down well with investors. Chriss was candid during the firm’s Q3 2023 earnings report, telling investors that he’s going into this venture with his “eyes wide open”. Chriss acknowledged the firm’s unsustainable cost base and insisted he was prioritizing the platform’s “most profitable growth priorities” with a view to ring-fencing “resources to those priorities”.

As of November 2023, PayPal has an active user base of around 428 million consumers. This includes approximately 35 million merchant account holders. Combined, PayPal’s consumer and merchant accounts generate annual payment flows worth upwards of $1.5 trillion. Continued pressure on the firm’s operating margins means Chriss and Co. need to do all they can to ensure PayPal is a leaner and meaner concern. Its one-touch payment inclusion within Braintree Payments has been viewed as a clever move to reach out further to merchants keen to scale and optimize conversion rates.