How To Buy PayPal Stock
Welcome to Trading Brokers step by step guide to buying PayPal stock. Here you will find an easy to understand explanation of trading PayPal stock. This includes how to buy PayPal shares online, what you need to trade PayPal stock and how to open a trading account with a stock broker so that you can buy PayPal stock online today.
Maybe you have heard of buying PayPal stock online or through a friend. Perhaps you are looking to trade and are curious about the different options available to you. Whether you are looking to speculate, invest or just learn more, this guide on how to buy PayPal stock can help you along your journey.
Paypal was founded in 1998. It serves as a peer-to-peer payment platform. Should you buy its stock or not?
Overview of PayPal
Globally, there is an ongoing paradigm shift from the use of cash payments to facilitate transactions. At the center of that shift are technology companies that help process online payments through various means – POS, wallets, QR payments, and even through cryptocurrencies.
One of such companies is PayPal Holdings Inc. Headquartered in San Jose, California, PayPal traces its origin to the founding of Confinity, an electronic payments platform in late 1998. Confinity would later merge with an online banking company called X.com to become PayPal, which went public in 2012 and was acquired by the e-commerce company, eBay, to become its significant payments processor.
At some point, PayPal was responsible for almost half of eBay’s revenue. In 2015, eBay spun off PayPal to become an independent entity. Today, PayPal has over 200 million active users worldwide and has processed at least $500 billion in transactions since inception. With more than 20,000 workers, it has emerged as one of the preferred methods of payment globally. PayPal’s services include in-store payment, e-commerce payment, and cross-border payments.
Recently, it also ventured into emerging payment frameworks like the fastest-growing peer-to-peer payments space through Venmo. It also has plans for cryptocurrencies.
PayPal facilitates electronic payments and charges a fee for doing so. To do this, it has created a galaxy of applications apart from the primary and eponymous “PayPal” platform. Prominent amongst them are Braintree, Venmo, Paydiant, and Xoom.
What Moves PayPal Stock?
PayPal is listed on the NASDAQ as PYP. It is a crucial member of the NASDAQ 100 and consistently ranks as one of the top 10 companies on the index by market cap. Nevertheless, many factors affect PayPal stock, and some of them are outlined and discussed below.
Industry and Strong Market Presence
PayPal plays in an ever-growing market. Global e-commerce transactions, for instance, are expected to eclipse $7 trillion by 2025. PayPal occupies the right place in the market and is well placed to take advantage of this growth.
One thing about the company is that it benefits from significant network effects. Merchants listing on PayPal necessitates customers signing up to PayPal, and as customers get on board, other merchants see the need to enlist. This cycle births growth for PayPal.
The next big thing in payments seems to be peer-to-peer, and PayPal is exceptionally well placed to benefit from the trend. Its Venmo already has nearly 40 million active users and has executed transactions worth over $100 billion.
PayPal did take charge of the online payments space. However, it also seemingly watched as the competition caught on. One very formidable competitor is Square, whose CashApp has been gaining traction against Venmo. Then there is Zelle, which has a competitive advantage in that it is backed by banks.
However, the most fierce competition might not be all that obvious. There is increasing incursion of the biggest tech giants into the e-commerce and online payments space. Amazon, for example, launching Amazon Pay, might eat deep into PayPal’s market share. Then, the social media giant Facebook, alongside its subsidiary, Instagram, is also launching big into the e-commerce space while also integrating payments.
Finally, traditional banks are also becoming quite tech-savvy. They are doing this either in partnership with established tech companies (like Zelle) or creating their own startups.
In the past, PayPal has used partnerships to scale its market presence. That has seemed to work. The most critical was with eBay. In the future, it will need a torrent of such partnerships, especially in the face of the ever-growing competition. We see signs of such in its deals with Alibaba and Baidu, allowing it to break into the Chinese market, which looks like the reigning goldmine in the global payments space right now.
The company has also partnered with Uber.
Expansion and New Markets
Over half of PayPal’s revenue comes from the US and UK, signaling its need to expand beyond. This is significantly more important, considering that the future of payments will be in emerging markets such as China and India, and Europe.
For all these expansion efforts, PayPal has had to make acquisitions. Thus, the acquisition of iZettle is a step in the right direction. Finally, PayPal might miss many opportunities by not allowing people in places like Africa to transact freely on its platforms. Competitors such as Stripe are fast filling this gap.
New and Promising Areas
Certain emerging areas in payments might define the future of the industry. One such area is in serving the underbanked, especially in emerging markets such as Asia and Africa. Worthy of note is PayPal’s investment in PineLab, an Indian startup attempting to solve this.
Furthermore, cryptocurrencies will play a considerable role in payments in the decades to come, and any serious payment processor must have some presence here. In this space, PayPal still has a lot of catching up to do.
Before Investing in PayPal
Despite being the typical growth stock, PayPal possesses strong fundamentals. Also, despite its giant status, it still has some room for growth. However, the global payments space will experience more paradigm shifts in the years to come, and PayPal has to strategically position itself to take advantage of the opportunities presented.
Investing in PayPal
Investing in PayPal stock is when you buy PayPal shares to own them outright, usually with a view to holding them for the long term. Investors would usually look to buy PayPal stock in order to try and make a profit when the PayPal stock price increases in value.
Trading PayPal stock
Trading PayPal stock is when a trader speculates on the movement in the PayPal stock price without actually owning the shares in PayPal. Traders tend to buy and sell PayPal stock on a more frequent basis, usually speculating on daily, weekly or monthly price fluctuations.
You can buy and sell PayPal stock online through various methods including spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).
One of the most popular ways to trade PayPal stock is via CFDs (contracts for differences). When trading PayPal CFDs, you do not actually invest in PayPal shares, meaning you are not tied to them. You are only speculating on the rise or fall of the PayPal stock price. A CFD is a financial contract, typically between a broker and a trader, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade.
A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with their own personal objectives. Traders would open long (buy) positions, if they think the stock price of PayPal will rise or short (sell) positions if they thought that the PayPal stock price will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.
For example, if you think PayPal shares are going to increase in price, you could buy a share CFD on the company. You will exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares increase in price and making a loss if they decrease in price.
On the contrary, if you think PayPal shares are going to decrease in price, you could sell a share CFD on the company. You will still exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares decrease in price and making a loss if they increase in price.
Futures contracts are an agreement to buy or sell a specified asset at a certain date and price. PayPal investors can use futures trading to speculate on the price movement of PayPal stock in order to try and make a profit. Traders would look to go long (buy) a futures contract if they believe the price will rise or short (sell) a futures contract if they believe the price will fall. The difference in price between the price at the start and expiry date of the futures contract is the profit or loss from the contract.
PayPal spread betting
Spread betting is a financial derivative that enables traders to speculate on PayPal stock falling or rising without taking ownership of the underlying asset. If the trader makes a correct prediction and the asset does move in that direction, they could make a profit, minus any broker fees. On the other hand, if the price moves against their prediction, they would incur a loss.
Financial spread betting is similar in ways to CFD trading except that you are betting a fixed amount per point on the PayPal stock price movement (either up or down) and then pay or receive the difference between the opening and closing price of the bet.
PayPal options are financial instruments that are derivatives based on the value of PayPal’s stock. Traders usually enter into calls when they expect the price of the underlying asset to increase, and puts when they expect the price to decrease. Option contracts come with an expiration date before which the holder needs to exercise their option to buy or sell an underlying asset at an agreed-upon price. The stated price on an option is known as the strike price.
Buyers can choose to exercise their calls and puts or not whereas sellers are obligated according to the buyer decision. Therefore, the sellers (writers) can be exposed to more risk than buyers whose losses can be limited to the premium paid for the contract in the instance they do not exercise the contract. On the other hand, sellers could lose more depending on the PayPal market price.
Exchange Traded Funds (ETFs) enable traders to invest in a basket of securities that trade intraday like individual stocks on an exchange, and are typically designed to track the performance of an existing market or group of markets.
Each ETF is usually focused on a specific sector, asset class, or category. ETFs can be commonly used to help diversify an investment portfolio and create a mini-portfolio, or, for the active trader, they can be used to try and take advantage of price movements.
PayPal is included in various ETF’s with shares in the U.S. ETF market. Traders who are interested in trading other companies alongside PayPal, may consider ETFs.
Where to buy PayPal stock?
Stock trades are processed via a stock exchange, where a stock broker represents each investor. The majority of investors will nowadays use an online stock broker to buy and sell stocks through a stock trading platform which will enable them to connect to the stock exchange. You can see a selection of our best stock brokers below with whom you can open an account to trade stocks online.
ASIC, BVI, CBI, FFAJ, FSA, FSCA
Min $100 Deposit
FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF
Min $250 Deposit
ASIC, FCA, DFSA, SCB, CySEC, BaFin, CMA
Min $200 Deposit
ASIC, CySEC, IFSC, DFSA
Min $5 Deposit
Why trade PayPal stock?
Trading the stock market has become a popular investment activity for many people, especially with the technology that we have these days making it more accessible than ever. There are a vast number of trading brokers, trading platforms and trading apps available for buying and selling PayPal stock with relative ease. The cost involved to get started makes trading PayPal stock accessible to traders of all experience levels from across the globe.
The availability of leverage has also contributed towards the increase in aspiring traders. Leverage allows traders to hold a position size greater than they would have been able to without it. E.g. An account balance of $1,000, could take a position size of $5,000 with 1:5 leverage. Whilst this can increase potential profits, it also greatly increases risk. It is therefore of the upmost importance that you have a clear understanding of the significant risks involved with online trading, especially when using leveraged positions.
The majority of traders would look to buy and sell PayPal stock to try and earn profit from the variation in PayPal’s stock price. When trading PayPal CFDs you can speculate long and short on prices rising or falling without actually needing to invest in PayPal shares. This can make it a more convenient trading method for anyone who has a trading account with an online broker. Alternatively, long term investors may purchase traditional shares in PayPal’s stock for a more long-term hold.
Buying PayPal stock can also be a way to diversify a trading portfolio and to hedge against shares in other stocks or investments in other asset classes such as forex, commodities, precious metals and cryptocurrencies.
However, before investing in PayPal, it is important you understand the dynamics that affect the PayPal stock price.
How to trade PayPal stock online?
If you have taken the time to read through the above, you should hopefully have an understanding of how to trade PayPal stock online. Here is a summary of the key steps:
1. Decide if trading PayPal stock is for you
Trading PayPal stock online carries an element of risk and can take more time than other forms of investing. You will need to research the company, manage your positions, follow market news and decide how to react to it. It is important to understand the risks and dedication that comes with trading PayPal stock online.
2. Educate yourself
Before trading PayPal stock, it is imperative to learn as much as possible about investing and trading online. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many online brokers that can help you to improve your trading skills and knowledge.
Most brokerages will also provide a free demo trading account so that you can practice trading PayPal stock online with virtual funds in order to familiarise yourself with the trading platforms and practice your trading strategies until you feel confident enough to open a real trading account.
3. Choose a PayPal stock broker
In order to trade PayPal stock online, you will need a broker account and trading platform to execute your trade positions through to the market. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.
If you do not have the time to research brokers, you can see a list of our best brokers that we have already prepared to help traders. If you would like to know more, you can also view our detailed guide on how to choose a trading broker.
4. Research PayPal
If you have made it this far then you may be ready to start trading PayPal stock online! The next step is to research PayPal to help increase your knowledge in the company. The best brokers should have this information conveniently displayed for you within their trading platform.
5. Have a trading plan
Some of the most important factors that can help determine PayPal stock trading performance can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.
6. Buy and sell PayPal stock
Once you feel ready to trade PayPal stock online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on PayPal, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of PayPal trades for the long-term, whereas traders may buy and sell PayPal stock on a daily basis.
Is trading PayPal stock right for me?
Trading PayPal stock is a popular choice for long-term investors and active traders. It can be suitable for scalping, day trading and swing trading. Traders who would usually trade forex, trade indices, trade commodities, trade cryptocurrency, may look to diversify their portfolio.
However, it is important to understand the significant risks involved with trading PayPal stock online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade PayPal stock and using trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most stock brokers provide unlimited demo accounts free of charge.
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