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Two reasons I will hold on to PayPal

$PayPal(PYPL.US)$ Two factors make me especially bullish on PayPal; Venmo and the power of its Balance Sheet.
Starting with Venmo, this is perhaps the biggest reason why I think PayPal still holds plenty of value and growth potential. Venmo is one of the most popular payment Apps in the United States. In 2020 over $159 billion in transactions were processed through Venmo in 2020, and the App is on track to deliver $900 million in revenues in 2021 according to the latest earnings call.
But Venmo is barely scratching the surface of what it can achieve, both in terms of growth and monetization. When it comes to the latter, we can see that Venmo can still come a long way in terms of monetization if we compare it to $Block(SQ.US)$ CashApp. According to estimates, CashApp produced $54 per user in 2020, while Venmo only made $12 from each active user. There are slight differences in transaction costs, but most of this comes from the fact that CashApp is used more for cryptocurrency transactions. This is something Venmo can easily replicate.
In terms of growth though, Venmo can go much farther. Originally, Venmo was conceived as a peer-to-peer payment system, but this is quickly moving to businesses too. $Amazon(AMZN.US)$ will be accepting Venmo payments starting in 2022, and I believe this will see significant success.
Venmo has a place in the mobile phones of 65 million people, and this is something PayPal can leverage to its advantage moving forward.
The other big reason I will continue to hold PayPal is its incredible Balance Sheet, and all the growth opportunities this opens. PayPal has $13.29 billion in cash and negative net debt. It has a much stronger balance sheet than its most established peers, such as $MasterCard(MA.US)$. It's now time for PayPal to put this money to good use to expand its platform, especially internationally, something we already got a taste of in the last investor presentation.
PayPal Paidy acquisition | Source: Investor Presentation
PayPal Paidy acquisition | Source: Investor Presentation
On September 7th, it was announced that PayPal was acquiring Paidy, which uses artificial intelligence to find out the creditworthiness of its users and offers payment instalment plans. This is just one example of how PayPal can enter new markets and expand its footprint. Much like I argued before with Shopify, PayPal can now leverage Paidy to also push its other payment platforms into the Japanese market. I am very excited to see what other acquisitions PayPal will make.
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