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Apple Deal Lifts PayPal's Prospects and Shares

Investopedia logo Investopedia 7/13/2017 Donna Fuscaldo
Apple Deal Lifts PayPal’s Prospects and Shares© John Smith Apple Deal Lifts PayPal’s Prospects and Shares

PayPal Holdings Inc. (PYPL) shares hit a record high on Wednesday after announcing it had reached a deal with Apple Inc. (AAPL) in which the tech giant will accept it as a payment method.

The digital payment company virtual assistant to make payments via the PayPal app. (See also: Why Apple, JPMorgan Want to Crush PayPal's Venmo.)

Preferred Payment Options

While Apple has its digital payment service, the deal isn’t expected to erode that business. In fact, it could result in more sales for the Cupertino, Calif.-based juggernaut from consumers who may not want to put their payment information on the internet.

“PayPal is by far the most used digital payment method besides debit and credit cards,” wrote Brendan Miller, a payments expert and analyst at Forrester, in a report.

“That alone will mean more transactions for Apple from customers who might have been leery of using their payment information online. This translates to less carts left abandoned in checkout.”

Under the deal, customers who have a Apple ID can choose PayPal as their preferred payment method. After that, all purchases will be via their PayPal account. (See also: Can PayPal Stock Still Pay in 2017?)

News of the deal sent shares of the payment company surging in trading Wednesday, hitting a buy rating on the stock. His new price target implies shares can gain an additional 20%.

 

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