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Wall Street is expected to evade PayPal with regard to the growing Venmo peer-to-peer payments platform.
Not only does PayPal (PYPL) show that it could make money with Venmo (a constant rebuke on Wall Street), but it does not plan to transfer the asset anytime soon to an open society (which a lot of Wall Street want to see).
"Part of the magic of Venmo and PayPal lies in the platform itself, it is integrated – it creates a network effect," said PayPal's finance director, John Rainey, at Yahoo Finance when he asked her if it made sense to separate Venmo from PayPal. "The exploitation of both on the same platform offers many synergies."
PayPal took over Venmo in 2013 by buying the $ 800 million Braintree digital payments reader. Since then, Venmo has found a very loyal base among teens and millennials. PayPal has extended Venmo to its own debit card earlier this year. It is now integrated with other mobile-centric companies like Uber, Uber Eats and Grubhub.
Meanwhile, the company managed to make money with what was largely a free platform of use.
On November 7, Venmo will begin charging users 1% on transfers of funds to bank accounts. Previously, the fees were 25 cents.
Third quarter results
Venmo has done its part to contribute to the better than expected results of PayPal for the third quarter, announced Thursday. Rainey says that about 24% of Venmo users (PayPal does not disclose the number of Venmo users) participated in a "monetizable transaction" in the third quarter, up from 17% in the second quarter. In terms of non-tech geek, PayPal returned more money to Venmo users in the third quarter.
Jefferies analyst John Hecht said in a note to clients that the monetizable transaction data suggested that PayPal earns Venmo money faster than many Wall Street thinks.
The total volume of payments on the platform increased by 78% in one year to reach $ 16.7 billion. The total number of users of Venmo also broke a record for the third consecutive quarter.
In total, PayPal announced a third-quarter profit higher than the Wall Street estimates by three cents a share. For 2019, PayPal saw sales growth of 17% leading to earnings growth of up to 21%.
PayPal proves that it is financially wise to operate its eponymous company and Venmo under one roof, for the time being. "Exploiting both on the same platform offers many synergies," says Rainey.
In addition, if Venmo can continue to demonstrate that he can earn money, it will be worth much more on public markets later. So, why the haste to sell?
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Brian Sozzi is a senior editor at Yahoo Finance. Follow him on Twitter @BrianSozzi"data-reactid =" 35 "> –
Brian Sozzi is a senior editor at Yahoo Finance. Follow him on Twitter @BrianSozzi
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