The stock of PayPal Holdings has experienced a decline following concerns raised by a Mizuho analyst regarding competition from other payment services, particularly Apple Pay, which are more favored by the younger demographic.
Analyst Dan Dolev has downgraded PayPal shares from Buy to Neutral, revising the target stock price to $65 from $72. Dolev expressed his apprehension in a research note on Tuesday, highlighting the continuous loss of market share to Apple Pay as a significant concern.
PayPal declined to provide any comments regarding this matter.
The worry surrounding Apple Pay’s increasing dominance over PayPal is not new. Competition has been a major factor contributing to PayPal stock’s significant decline of 81% since its record closing high of $308.53 on July 23, 2021, with the current stock price at $58.65 as of Tuesday. Additionally, general economic pressures and tighter margins due to slower growth in the company’s branded checkout business have also affected the stock.
During Tuesday’s trading, the stock experienced a decrease of 3.9%.
Dolev raised another concern related to the emerging age demographic problem, as younger cohorts in the U.S. are gravitating towards newer payment methods such as Apple Pay, auto-fill, and BNPL (Buy Now Pay Later).
This is not the first time Dolev has addressed the competition faced by PayPal. In the past, he has suggested the consolidation of PayPal and Venmo into a single app to enhance their digital wallet capabilities.
Venmo, which is owned by PayPal, is a popular payment app among younger users. Dolev believes that merging the two platforms could lead to better integration, ultimately driving Venmo’s user base towards utilizing the branded PayPal button during checkout.