BTIG Upgrade Sends Shares of PayPal Climbing Higher

PayPal saw its stock climb higher in early Thursday trading ahead of th ebell after BTIG analyst Mark Palmer upgraded shares from “neutral” to “buy.”

The analyst cited traction for the company’s cryptocurrency platform for the upgrade. It was in October that PayPal announced it would start allowing users to buy, hold, and sell cryptocurrencies like bitcoin through the PayPal platform.

PayPal’s 361 million users can now buy, sell, and hold cryptocurrencies.

Palmer said that Paxos, a private company powering PayPal’s crypto efforts, “has seen its trading volumes rise impressively in recent weeks.” The analyst expects that “the vast majority” of volume on Paxos’s itBit crypto exchange reflects trades for PayPal customers, leading to his projection that crypto could add upwards of $1 billion to PayPal’s annual revenues by 2022.

“Much more importantly, the traction seen in itBit’s rising crypto volumes bodes well for PYPL’s active account growth and engagement,” he wrote in a note.

PayPal also will be allowing customers to make online purchases using their cryptocurrency holdings, which according to Palmer, would represent a lower-cost funding mechanism for PayPal compared to when people use its service to fund online purchases with their credit cards.

“The upshot is that the lower-cost funding associated with the use of crypto in funding merchant transactions could provide a boost to its take rate and margins,” he also wrote.

The analyst has a $300 price target on the stock.

PayPal shares are up 110% over the past 12 months.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.