Why is PayPal (PYPL) Stock Running with the Bulls?
PayPal is currently trading at $53.28 per share, up 1.46% or $0.76. The recent performance of the stock has been nothing short of remarkable. Consider that in April 2017, PayPal was struggling to break through the critical $44 per share resistance level, and it was trading sideways for most of Q1 and Q2 2017. The breakout month was May. PayPal stock spiked from $44 per share to its current level. That represents a gain of approximately 21% within six weeks. The technical indicators for PayPal are equally bullish. The 50-day moving average has risen to $49.25 per share, while the 200-day moving average continues to edge higher, and is currently at $43.02 per share. These are indeed encouraging times for binary options stock traders who are now viewing PayPal with increased optimism.
What Is Driving the Stock Price Higher?
PayPal is without doubt the world’s #1 e-commerce payments processing option. It has significant competition snapping at its heels, but it remains a dominant force in the industry. Recently, PayPal acquired a payment app that enjoys widespread usage among millennials – Venmo. This acquisition serves to expand PayPal’s sphere of influence to an ever increasing pool of customers.
The rapid rise of mobile payments options cannot be ignored by major e-commerce payments processes like PayPal. Consider that several years ago every $1 that PayPal generated in marginal revenues brought in expenses of $0.50. Fast forward to 2016: $1 in marginal revenues is only incurring additional expenses of $0.10. This points to increased efficiency of operations for PayPal, and investors are taking note.
The exponential growth in mobile payments processing is shifting the tectonic plates in e-commerce. Over the past 1 year, PayPal spent some $700 million on capital projects, while generating revenues of $3.1 billion. The $2.4 billion available to PayPal Holdings Inc could be used for any number of ambitious undertaking such as further capital expenditure, share buybacks or additional acquisitions. Traders and investors are encouraged by this surge of liquidity, since it indicates that the company is in a healthy financial position.
