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PayPal strikes a deal with Amazon, what could this mean for the share price?

PayPal’s Venmo is set to appear on Amazon’s checkout page next year…
The post PayPal strikes a deal with Amazon, what could this mean for the share price? appeared first on The Motley Fool Australia. –

It was a big night last night for the PayPal Holdings Inc (NASDAQ: PYPL) share price.

The United States-based payments giant released its results for the third quarter of 2021, which produced some mixed numbers. On the other hand, the company also announced it is partnering with Amazon.com Inc (NASDAQ: AMZN) to offer its Venmo payment option at the online checkout.

Despite this news, the PayPal share price is trading 4.3% lower to US$229.42 a pop in after-hours trade.

Let’s take a look at the latest announcement.

One door closes, another one opens

A multi-decade partnership between PayPal and eBay Inc (NASDAQ: EBAY) has been coming to an end since the e-commerce platform failed to renew its agreement with the payment provider in 2018. According to its latest quarterly results, eBay now represents only 3% of the total payment volume for PayPal.

As the door closes on one e-commerce partnership, another has swung open. Favourably for PayPal shareholders, the company has moved up in the world in terms of partnership size. Today, the company announced the inking of a deal with the fifth-largest listed company in the world — Amazon.

Indeed, the new partnership will likely only increase PayPal’s already established ubiquity in the payments world. At the end of the third quarter, the company’s payment method was available across 75% of the top 1,500 North American and European retailers.

PayPal plans to launch its integration on Amazon in 2022, allowing customers to make purchases on the site using their Venmo accounts. Yet, the PayPal share price is down in after-hours trade today.

Commenting on the announcement, PayPal CEO Dan Schulman said:

This is obviously a very significant effort in our Venmo monetisation efforts. It marks the beginning of an exciting journey with Amazon, now that we’re no longer constrained by the contractual obligations of the eBay operating agreement.

PayPay share price in review

The last month has been a bumpy ride for the US payments company. On 20 October, the market reacted with increased selling pressure after rumours surfaced that PayPal might have been looking to acquire social media service, Pinterest Inc (NYSE: PINS).

However, this rumour was later dispelled by PayPal, stating it was not pursuing Pinterest “at this time”.

The PayPal share price is down 10% in the last month. As a result, the company is currently trading on price-to-earnings (P/E) ratio of 56 times.

The post PayPal strikes a deal with Amazon, what could this mean for the share price? appeared first on The Motley Fool Australia.

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More reading

For most of the last four years, shares went nowhere. But…

Why Pinterest stock plunged on Monday

Why PayPal stock popped On Monday

If Paypal buys Pinterest, what could it mean for Afterpay shares?

Why Robinhood Should Worry About PayPal’s New Payments App

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Amazon and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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