Prediction: PayPal Will Soar Over the Next 5 Years. Here's 1 Reason Why.

PayPal Holdings (NASDAQ: PYPL) has experienced remarkable growth in recent years. However, this surge stalled as the world started moving past the COVID-19 pandemic. The company’s user base hit a plateau, and it seemed there was a lack of a clear strategy for future earnings and revenue expansion.

In late 2023, PayPal underwent a significant leadership change. Alex Chriss, who previously worked at Intuit, stepped into the role of CEO. Almost the entire executive team was refreshed, bringing a new perspective to the organization.

The initial results under this new leadership have been promising. By focusing on efficiency, PayPal reported a 22% year-over-year increase in adjusted earnings per share (EPS) in the last quarter. Additionally, the introduction of features like Fastlane checkout, strategic partnerships, and the PayPal Everywhere initiative aim to enhance debit card usage. The positive impacts of these initiatives are expected to reflect in future financial results.

PayPal's Advertising Platform Offers Great Potential

One of the most exciting recent announcements from PayPal is its plan to develop an advertising platform. This decision is backed by the company’s access to valuable spending data from over 400 million users across PayPal and Venmo. This data can potentially allow PayPal to target advertisements more effectively than its competitors.

The development of this advertising platform will be led by Mark Grether, who previously was instrumental in building Uber's ad business into a billion-dollar revenue stream. With the official launch of PayPal Ads occurring in October, actual revenue figures are yet to be disclosed. However, other companies with rich consumer data have seen significant success with their advertising operations. For instance, the ad business initiated by Amazon generated $14.3 billion in the third quarter of 2024 alone, significantly benefiting from its vast consumer buying data.

While it is too early to speculate if PayPal's advertising platform will achieve similar heights as Amazon's, it would be unwise to ignore this strategic direction pursued by the new leadership.

Disclaimer: The views expressed in this article are for informational purposes only and do not constitute investment advice. Investors should conduct their own research before making any investment decisions.

PayPal, Leadership, Advertising