PayPal (NASDAQ: PYPL) has faced multiple challenges in recent years, with its market value falling by more than 80% from 2021 to the end of 2023.* However, since CEO Alex Chriss took over in September 2023, the firm has been focused on a strategic turnaround, with its mobile payments platform Venmo becoming a key pillar of growth. PayPal has an ambitious goal – to increase Venmo's annual revenue to over $2 billion by 2027, a substantial increase from $900 million in 2021.
PayPal share price performance over the past five years*
Strong user and transaction growth
Venmo has grown by 24% among paying users over the past year, with mid-range single-digit annual user base growth expected to continue in the coming years. The expansion of Venmo debit card payments, where annual growth of more than 20% is expected, has had a major impact on revenue growth.
Another important element of growth is the "Pay With Venmo" feature, which allows payments at merchants. This segment is expected to grow twice as fast as debit cards, giving Venmo wider use beyond peer-to-peer transactions and penetrating e-commerce and brick-and-mortar stores. This growth is supported by a 50% year-over-year increase in merchants using "Pay With Venmo," with new partners including DoorDash, Starbucks, Ticketmaster, Instacart and MoonPay. A significant step is also the cooperation with JetBlue, which became the first airline to allow booking flights through Venmo.
Transforming Venmo into an all-in-one finance platform
PayPal is not only focused on growing transactions, but also on transforming Venmo into a full-fledged finance management app. Venmo has the ambition to become a "go-to money movement app," where users will not only be able to send money to each other, but also store, invest and pay with merchants. The goal is to keep as much finance as possible in the Venmo ecosystem, increasing transaction volume while strengthening user loyalty.
Venmo debit card support, as well as the growing acceptance of "Pay With Venmo," are key tools for monetizing the user base. In addition, PayPal is working on new features that will allow for an increase in user account balances, ensuring greater stability in transaction fee income.
Restoring profitability and long-term growth
CEO Alex Chriss is primarily focused on restoring PayPal's profitability, with an emphasis on improving transaction margins, which began to recover in 2023 after a decline in 2021-2022. The primary goal is to achieve high single-digit growth in transaction margins, while at the same time stable earnings per share growth until 2027.
In the long run, PayPal can benefit from the growing demand for digital payments, the expansion of payment options in e-commerce and brick-and-mortar stores, as well as the growing acceptance of Venmo among large merchants and platforms. In the event that the company manages to effectively expand Venmo's features, as well as increase margins on transactions, PayPal can potentially return to a steady growth trajectory.
For investors, PayPal presents an opportunity for long-term growth, with the main risks including competitive pressure in fintech services and possible macroeconomic factors affecting consumer spending. However, if the company meets its ambitious goals, Venmo can become a key driver of growth and provide PayPal with stable revenue in the coming years. [1]
* Past performance is not a guarantee of future results
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which is subject to change. Such statements are not a guarantee of future performance. They involve risks and other uncertainties that are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
Resources:
https://www.cnbc.com/2025/02/25/paypal-strategy-for-venmo-to-reach-2-billion-in-revenue-in-2027.html
https://www.cnbc.com/2025/02/04/paypal-pypl-q4-earnings.html
