The group has added strings to its bow and looks reasonably valued
Matthew Partridge Shares editor
One of the key trends of the past few decades has been the rise of e-commerce. While it has receded from the highs seen during the pandemic, when the closure of most shops meant that nearly 40% of retail sales in the UK were made online, it still accounts for 16% of all sales in the US and more than a quarter in Britain. This has been good news for companies such as Amazon, and bad news for the high street. However, rather than risking money on a particular retailer, it may make sense for traders to buy one of the most important gatekeepers in the world of e-commerce.
The company in question is, of course, PayPal (Nasdaq: PYPL). PayPal runs one of the most popular electronic-payments platforms, used for everything from retail transactions to services such as AirBnb. It has 426 million active accounts across 200 markets. While this platform still provides the core of PayPal’s revenue, growth has slowed drastically since Covid. This is partly due to the general downturn in household spending. However, another factor, and one that seems to have rattled many investors, is intensifying competition from rival services provided by Google and Apple. These services have threatened to entice customers away from PayPal and forced it into defensive price cuts, hurting its margins.
Diversifying beyond payments
The good news is that PayPal seems to have found a way out of its problems by broadening its business. The large number of different payment options on the market may be bad news for its main branded payments business (although it is still growing), but it has created an opportunity for its Braintree subsidiary, which serves as a simple single gateway to conne
