PayPal ‘now risks getting disrupted’ by competitors, analyst says in downgrade, Warns MarketWatch

From MarketWatch:

PayPal Holdings Inc. has a reputation for disrupting the payments ecosystem, but it “now risks getting disrupted” itself, according to an analyst.

Bernstein’s Harshita Rawat downgraded the stock to market perform from outperform Wednesday, citing various competitive pressures for the digital payments giant. Shares of PayPal PYPL, -3.64% are off 2.5% in premarket trading.

Rawat worries about the “increasing aggregation” of e-commerce activity on large platforms like Inc. AMZN, +0.74% and Shopify Inc. SHOP, -1.47%, which she estimates are together responsible for about 32% of U.S. commerce.

“Amazon currently doesn’t accept PayPal and just agreed to accept Venmo starting in 2022,” she wrote. “Shopify has ambitions of creating its own payments business and has been pushing its merchants aggressively to convert to Shopify payments platform (and also towards the Shop Pay button).”

Smaller merchants “are PayPal’s bread and butter, and Shopify’s meteoric rise and push towards its own payments platform is particularly problematic,” Rawat continued. PayPal’s transaction economics are better with smaller businesses than with very large ones, she argued. Shopify Inc. represents an “unassailable competitor” when it comes to the small-business demographic, in her view.

Continue reading PayPal ‘now risks getting disrupted’ by competitors, analyst says in downgrade on MarketWatch

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