A Unique Opportunity for PYPL Stock
There is a tsunami headed for PayPal Holdings Inc (NASDAQ:PYPL), but don’t panic just yet. Being the market leader has its advantages. By following these two simple steps, PYPL stock could surf this tidal wave to massive gains in the next year.
But before I reveal this transformative trend, let’s take a bird’s eye view of the financial industry. There’s been a ton of upheaval in the last two decades. We saw the Dotcom Bubble burst at the turn of the century. Then we witnessed a sub-prime lending crisis.
And after all that, we suffered a full-blown financial meltdown.
People lost faith in banks, the government, and the system in general. Everything that people believed in burnt to the ground. But scientists tell us that a fire can often cleanse the soil, making it fertile for new growth.
That’s what we’re seeing in the finance industry today. An innovative trend is rising from the ashes of finance, and believe me, it could mean huge things for PYPL stock.
Why I’m Bullish on PayPal
So what is this mysterious trend? I’ll give you a hint. It is the engine that drives higher share prices at Facebook Inc, and Amazon.com, Inc. It also supports a huge range of products from Alphabet Inc, like “Google Search” or “Google Translate.”
I’m talking about artificial intelligence (AI). The adoption of AI technology has been enormous in the last decade, powered by faster computers and better software. Industry after industry has fallen to the computing power of machine learning algorithms.
AI software effectively lets companies do what was previously impossible. They can sift through massive amounts of data and detect patterns, which are invisible to the naked eye.
With every passing month, there are more AI firms breaking into the “FinTech” (financial technology) space. The movement is not yet in the public eye, but these firms are collecting ungodly sums of money behind the scenes. One of them is even funded by Goldman Sachs Group Inc.
The entire financial sector is about to be turned upside down by these companies. Luckily, PayPal is the market leader in digital payments. The company was ahead of this trend by more than a decade.
After all, let’s not forget that PayPal only became viable after it built advanced software to detect fraud. It was the early days of the Internet and people needed to know they could enter their credit cards online without the fear of being hacked. (Source: “PayPal Fights Fraud with Machine Learning and ‘Human Detectives’,” Wall Street Journal, August 25, 2015.)
PayPal solved that problem by inventing an early form of AI software. They’ve been way ahead of the curve. If they want to stay that way, PayPal should follow these two simple steps:
- Buy a startup or two: PayPal has an enormous userbase that gives the company an advantage over the newbies. But there are so many startups whose software could quicken the pace of PayPal’s growth. For instance, a startup named FinGenius created software that is like Google’s search function, but for finance. (Source: “FinGenius – Products,” FinGenius, last accessed February 12, 2016.)
Users can type in a question like “How much did I spend on my car last year?” and the app provides an answer in plain English. If PayPal bought FinGenius, it could integrate those features and cement its position as frontrunner.
- Target the banks: PYPL stock could also skyrocket if the company got into lending. There are many startups trying to destroy the big banks by providing peer-to-peer lending. I won’t get into the technical details of how it all works, but it effectively cuts out huge bank fees. (Source: “SoFi CEO Mike Cagney: Your Bank Is Not Your Friend, and That’s a Problem,” Re/Code, February 8, 2016.)
If PayPal gets into lending, and it keeps control on the payments side, it could become the first pillar in a new banking system. Can you IMAGINE the capital gains possible on that trade?
It would be like owning JPMorgan stock in the early 20th century. But it all depends on PayPal executing the two moves I stated above. Lucky for us, PayPal executives seem to be thinking along similar lines.
Why do you think PYPL stock should split from eBay Inc.?