PayPal shares rose 5.5% on Wednesday as the company announced the launch of a new service that will allow its customers to buy, hold and sell cryptocurrencies from their PayPal account. The service will be available to PayPal accountholders in the US in the coming weeks, the company said.
Initially, the new service will support Bitcoin, Ethereum, Bitcoin Cash and Litecoin. PayPal (PYPL) is offering the new service in the US in partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services. The company also disclosed that it has been granted a conditional Bitlicense by the New York State Department of Financial Services or NYDFS.
The new service reflects PayPal’s plans to enable its customers to use their cryptocurrency holdings to make purchases at the company’s 26 million merchants worldwide beginning early next year. The company intends to expand the feature to its Venmo platform and select international markets in the first half of 2021.
Paypal’s CEO Dan Schulman commented, “Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange.”
“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.” (See PYPL stock analysis on TipRanks)
PayPal’s cryptocurrency offering will include educational content that will help accountholders understand the cryptocurrency ecosystem and the risks and opportunities involved. The company will not be charging any service fees for buying or selling cryptocurrency through the end of this year. It also will not charge any fees for holding cryptocurrency in a PayPal account.
On Wednesday, Barclays analyst Ramsey El Assal increased his price target for PayPal to $235 from $228 and reiterated a Buy rating. In a research note to investors, the analyst stated that while 3Q expectations are elevated, pandemic-related tailwinds “should see the company through.”
The analyst also added that leading indicators show that e-commerce growth has moderated slightly quarter-over-quarter “but remains at robust levels”.
The Street mirrors El Assal’s bullish stance with a Strong Buy consensus based on 25 Buys and 5 Holds with no Sell ratings. With shares advancing an impressive 97% year-to-date, the average analyst price target of $223.54 reflects a modest upside potential of 4.9% for the coming months.