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What's going on?

PayPal’s come a long way from humble beginnings: the US payments giant posted bumper earnings late Wednesday, and it had cryptocurrency trading partly to thank.

What does this mean?

PayPal’s revenue was 31% higher last quarter than a year previously, while profit shot up 85% to reach its highest level ever. Both figures were above investors’ expectations, driven by an ongoing surge in ecommerce spending: the company handled over $1 trillion worth of transactions over the last 12 months.

But PayPal also pointed to cryptocurrency as a major new source of growth. Since late March, its US users have been able to buy, sell, and pay for stuff with four of the largest digital currencies (although dogecoin remains as-yet unsupported). Half of those open PayPal’s app daily, suggesting crypto could be an exciting avenue to increase engagement. With a full-blown digital wallet on the way later this year, it’s perhaps no surprise the company’s earnings forecast for the rest of 2021 was higher than investors had anticipated.

Why should I care?

The bigger picture: Brace, brace, Coinbase.

PayPal may have its crosshairs trained on newly listed cryptocurrency exchange Coinbase in particular. With 26 million retailers signed up, PayPal’s well-positioned to cash in on wider acceptance of crypto-based payment options – and convenience could lure across some of Coinbase’s current six million users, draining the latter’s own earnings potential. That may explain why Coinbase’s share price fell 6% on Thursday, while PayPal’s rose 3%.

For markets: Stocks are, like, so 2020.

Retail investors have apparently lost interest in the stock market recently, turning their attention to cryptocurrencies instead. According to US investment bank Jefferies and European stock exchanges, share trading volumes fell 20-30% in April compared to March, while crypto trading activity rose 40%.

Originally posted as part of the Finimize daily email.

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