Digital payment

Is PayPal Stock A Buy After Latest Acquisition News?

The payment leader has confirmed that it is buying Paidy for a whopping $2.7 billion to further boost its buy now, pay later efforts.

The digital payments company has announced that it is acquiring the Tokyo-based buy now, pay later (BNPL) service in the latest shake-up in the thriving industry. PayPal (NASDAQ: PYPL) stated that the acquisition will be paid in all-cash. 

BNPL works by a consumer purchasing an item and then paying it for at another time in installments. Usually, it comes without interest for the shopper and generally does not require a credit check. 

BNPL has become very popular lately, boosted by people buying goods during the pandemic and then paying for them when their stimulus checks came through. Rival payment app Square also made a similar move in buying Afterpay last month for $29 billion, which might have prompted PayPal to make this acquisition. Investors are starting to pay attention to the sector as these huge companies drop billions of dollars on acquisitions as it means there must be lots of potential in the space. The industry is crowded though. Affirm, another BNPL firm, saw its shares skyrocket last month after it announced a partnership with Amazon.

Japan only has a few ‘unicorns’, or start-ups worth over $1 billion, and Paidy is one of them. 

Last year, the company rolled out Japan’s first zero-interest post-payment service. While the BNPL space has become very popular globally, the trend is only now starting to catch on in Japan. This is likely because cash is still king for Japanese people. 

Is PayPal stock a buy? 

Paidy has 6 million registered users which use the service to split the cost of items into three equal installments with no interest. With the buy, PayPal will be introduced to a new audience who are already using Paidy. Having a Japanese company with millions of trusted users also gives PayPal services credibility in the country. 

PayPal’s vice-president and head of business in Japan, Peter Kenevan, stated: 

“Paidy pioneered buy now, pay later solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizeable two-sided platform of consumers and merchants.”

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