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Why PayPal's Stock Gained 36% in the First Half of 2019

What happened

Shares of digital-payments specialist PayPal Holdings (NASDAQ: PYPL) rose 36.1% in the first six months of 2019, according to data from S&P Global Market Intelligence. The surge was more of a steady climb than the result of any particular trigger event.

So what

PayPal beat Wall Street's bottom-line expectations in each of the two earnings reports it presented during the first half, including a large outperformance in the first quarter. The company now sports 277 million active accounts, managing $161 billion of payments in the first quarter alone.

Mobile-payment service Venmo has 40 million active users and is growing rapidly. Venmo is very popular among younger consumers, thanks to a comments system that makes this payment service feel almost like a social media platform. Here, PayPal is exploring new monetization strategies for the mostly free-to-use service such as Venmo-branded credit and debit cards, as well as the ability to send payments faster for a small fee.

The company also announced a new partnership with Facebook's Instagram service, made another strategic tie-up with Uber, and started working toward a blockchain-based payment service to call its own. All of these initiatives helped PayPal's stock rise higher.

Image source: Getty Images.

Now what

We're still talking about a relatively young growth stock here. PayPal's payment-processing volume may seem impressive, but $161 billion per quarter is nothing next to sector-giant Visa's $2.8 trillion for the same period. There's a lot of growing left to do, and PayPal is attacking this huge addressable market with an innovative attitude. I wouldn't be surprised to see the stock continue to climb in the second quarter -- and far beyond.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and PayPal Holdings. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.


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