8/25/2023 0 Comments Paypal stock futureIn fact, on the call management noted that only about 50% of the base is currently on the new app and that when customers on the app discover new services, the average revenue per active increases by 25%, indicating that increased engagement does indeed lead to increased monetization. ecommerce market and will offer pay with Venmo later this year), there are still more on the way including a savings account and plans to introduce an equity trading platform (users can already trade crypto on the app). While we have seen features added in recent months, including bill pay and online shopping built right in thanks to new partnerships with large online marketplaces (like Amazon, which represents ~40% of the U.S. So, with engagement now being the focus, what can management do to help drive this and increase ARPU as a result? The obvious move is to increase features on the new app. PayPal supplementing the disclosure of net new actives with the addition of monthly active unique users and APRU metrics should help explain this story. Put another way, in an environment characterized by intense promotional activity quality over quantity may be the best train of thought going forward. After all, what good is another 100 million accounts if you can't profit off them? Instead, with all this competition out there, perhaps management is right to be more focused on increasing engagement with the current base and growing average revenue per user (ARPU), rather than driving account growth at all costs. Given this dynamic, it stands to reason that simply adding users, no matter the cost, may not be the best move from a long-term profitability standpoint. A similar level of competition can be called out in the fintech space with public and private companies including (but not limited to) names like Block, formerly Square, Affirm, Sofi, Payoneer, Adyen, Stripe, Klarna, traditional banks investing in-app offerings and mega cap tech names like Apple and Alphabet pushing into the market and competing for new accounts. That dynamic has resulted from the incredible competition being seen in the online sportsbook market. That determination means the upfront cost simply isn't warranted based on the potential longer-term returns. Wynn Resorts (also a Club stock and reporting earnings after the bell Wednesday) pivoted its strategy in the industry, stating the cost of acquisition that companies are paying in an effort to grab market share is simply not justifiable based on their calculation of the long term value of an acquired customer. Take a look at the online sports betting space. Quality over quantity Starting with the 2025 active accounts target, while the removal of this target is certainly disappointing, perhaps management isn't wrong to be rethinking their approach. To be clear, this is not meant to be a defense of the quarter or management's commentary - but rather, with everyone well aware of what has and can go wrong, we want to take a moment to think about what they may be overlooking and what moves management can still make to get back on track. While action like we are seeing Wednesday - down more than 24% to roughly $132 per share - can cause even the most dispassionate investors to act emotionally, we want to check that emotion at the door and provide a more constructive view. With an eBay unwind headwind that has lasted far longer than expected and PayPal management suspending longer-term active accounts guidance while being seemingly unable to correctly forecast near-term dynamics, credibility is on the line. There's no sugar coating it - the PayPal (PYPL) trading action following Tuesday night's earnings release was downright ugly. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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