In a recent appearance on Schwab Network's the Trading 360 with Nicole Petallides, Chris Wang provided expert insights and analysis on the 1st quarter earnings report from PayPal.

PayPal

– CEO Alex Chriss set expectations very conservatively last quarter and should setup for positive surprises in 2024

– Announced new product innovations (Fastlane, Smart Receipts, enhanced Venmo business profiles) – need to give color on how these products are being adopted

– branded PayPal checkout grew 7% in Q1 vs 5% last quarter –  less than US ecommerce growth of 8% in 2023

CEO Chriss is focused on profitable growth; but it isn’t clear how long the transition will take. PYPL is cutting headcount by 9% in 2024; and is reinvesting those savings into high priority product initiatives focused on transforming checkout (passwordless checkout, guest checkout, smart receipts), improving the consumer app, and unifying its tech stack onto a single platform.

PayPal hasn't been innovating and hasn't delivered the value proposition to consumers or merchants.

While the competitive landscape has become more fierce, the PayPal platform is still big in the payments space with ¼ of ecommerce flowing through the PayPal ecosystem. With 35 million merchants and 400mm consumer accounts using PayPal, there is opportunity to help businesses convert more sales. PayPal needs to prove that they can be the innovator in this space and to leverage their big data sets to deliver value to consumers and merchants.

Their Fastlane product is getting good traction and results. It can reduce checkout time by 40% and so far with their partner BigCommerce, it is leading to 70% higher conversion rate. If they can turn on their innovation engine, PayPal stock could have great growth potential. Keep in mind the stock is still trading 75% below its all-time high.