PYPL Stock: PayPal Holdings Inc’s Next Project Could Be a Game Changer

PYPL StockMajor Upside for PYPL Stock

Paypal Holdings Inc (NASDAQ:PYPL) stock hasn’t really done much since the company split off from eBay Inc (NASDAQ:EBAY) and became its own entity last summer. In that time, PYPL stock has risen only about nine percent as the company is facing increasing competition. But here’s something that could be a catalyst for PYPL stock.

One of the big problems users have when it comes to paying for things on the Internet is that it’s a hassle to carry your payments information across web sites, such as credit card, billing, and shipping information. Every time a user checks out at a certain web site, they have to enter all this information again. This is also bad for merchants, since the longer a customer spends at the checkout entering information, the more time there is for the customer to think about making the purchase. Merchants don’t want customers to think.

Last summer, PayPal’s “One Touch” began its rollout in the U.S. across the mobile Web. It’s now available everywhere and it’s looking like it could be a boon for PYPL stock.

With One Touch, a user only needs to log in once with PayPal and all login information will be saved on the user’s device. That allows them to shop and pay for goods on mobile apps and web sites with just one click. And it’s also really fast. There’s no time for a customer to have second thoughts about their purchase, and that’s sweet music to merchants’ ears.

It’s interesting how something that sounds so simple can catch on so well with users. That’s exactly what is happening with PayPal’s One Touch. According to data from comScore, PayPal customers are completing purchases at a higher rate than all other competitors at online stores and that’s good news for PayPal. (Source: “PayPal’s Power Playing Week,” PYMNTS, April 22, 2016.)

PayPal customers are making 15 million transactions a day using the feature and they are completing their purchases 87.5% of the time. (Source: “New study puts PayPal at the forefront of digital buying,” Business Insider, April 22, 2016.) That number puts it well ahead of rival Visa Inc (NYSE:V), whose “Visa Checkout” has a 55.1% conversion rate. Users of other platforms, which include “all other forms” of payment such as card on file, has a conversion rate of 45.6%. (Source: PYMNTS, op cit.)

That number for PayPal could continue to rise too, because One Touch is becoming a very popular feature among PayPal customers. In December, One Touch had about 10 million users from 23 countries. That number has more than doubled to 21 million customers in 203 markets in just a few months. (Source: Business Insider, op cit.)

The good news for PayPal is that the company still has a lot of room to grow the feature. Only 7.5% of PayPal’s 179 million total customers use One Touch. (Source: Ibid.) As that number increases, conversion rates should also increase.

One Touch has also lead Citigroup Inc analyst Ashwin Shirvaikar to raise his price target for PYPL stock from $41.00 to $46.00. That’s 15% higher than Friday’s PYPL closing price.

“We continue to view PYPL as the best way to play the e-commerce/m-commerce trend,” Shirvaikar said. “PayPal’s recently publicized success with the rapid ramp of One Touch is an example of this momentum.” (Source: “Citi Raises Target On PayPal Ahead Of Wednesday’s Q1 Results,” Benzinga, April 22, 2016.)

The Bottom Line on PYPL Stock

PayPal is at the forefront in digital payments. The company always seems to be leading the field with its innovative products and One Touch is no different. As One Touch continues to catch on with users at its rapid pace, it could help push PYPL stock in the right direction.