PayPal Faces Growing Skepticism from Wall Street Analysts

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These developments indicate a shifting landscape for PayPal and underscore the importance of addressing market challenges and adapting to changing consumer preferences.

PayPal and the Challenges in the Mobile Checkout Landscape

PayPal has established itself as a dominant player in desktop checkout, but it is facing challenges in the mobile arena. With more consumers now opting for mobile purchases, PayPal’s mobile checkout performance has not been as strong as its desktop counterpart. In contrast, Apple Pay, a mobile payment solution by Apple Inc., holds a better position in the mobile space compared to desktop.

Shares of PayPal experienced a 1.4% decline at the opening of Tuesday’s trading session.

While PayPal owns Venmo, renowned as the crown jewel of peer-to-peer payments in the U.S., it is encountering strong competition from platforms like Zelle. Additionally, PayPal seems to be struggling with improving Venmo’s monetization profile.

Interestingly, Dolev, a well-known expert in the field, suggests that Venmo’s core customer base consists of individuals who still rely on traditional banks for financial services. On the other hand, Square Inc.’s Cash App attracts customers who are in need of such services.

Dolev also sheds light on the margin challenges that PayPal is currently facing. The company is witnessing a significant proportion of its overall business being contributed by its lower-margin unbranded checkout product. This trend may continue to exert pressure on the company’s gross profit.

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