PayPal Could Let Its Users Trade Stocks Soon
The well-known payment company PayPal (NASDAQ: PYPL) has been rumored to have big upcoming plans. The company is hoping to start expanding its business by offering its users the ability to trade individual stocks.
Last year, the company rolled out its feature allowing users to trade cryptocurrencies, so it seems like it would only make sense that the company has been looking toward expanding and exploring ways to let its users trade individual stocks.
While these plans haven’t been confirmed directly from PayPal just yet, I wouldn’t be surprised if we heard something in the near future. Recently, the California-based company has hired brokerage industry veteran Rich Hagen. Hagen was the co-founder of the online brokerage TradeKing, which was acquired by Ally Invest. And now, according to his LinkedIn page, he is listed as CEO of an unreported division of PayPal called Invest at PayPal.
Even though the company hasn’t officially announced this Invest at PayPal division or its plans to give its users the option to trade individual stocks, it’s easy to start connecting the dots that PayPal has big plans to go beyond just being a payment company.
PayPal has dominated the market for decades, so it’s an excellent time to shift some of its businesses in a new direction that appears to be growing and gaining attention. CNBC reports that according to estimates from JMP Securities, "More than 10 million new individual investors have entered the market in the first half of this year," which has matched 2020’s record level.
More individuals are investing. Those people who thought they would never make a trade in their lifetime and that the stock market was off-limits to them have now shifted their mindset. There are a variety of factors that could have contributed to this surge of new individual investors.
I believe that one of the biggest factors is how for most of 2020, people were stuck inside their homes trying to find new hobbies to occupy their time as most of the world was under stay-at-home orders because of the coronavirus pandemic. Another factor could be that people have had more money to spend because the government was giving out stimulus checks. And one last factor that’s worthy of pointing out is that there have been many viral events like meme stocks. GameStop, for example — a company once headed for bankruptcy — has experienced massive stock surges.
It’s been an exciting year for the stock market, and because of being stuck at home and not having much else to do, many people are consuming news a lot more and could be experiencing FOMO (fear of missing out). No one wants to be left behind, especially when it means that you could be minting fortunes.
Some are calling this the retail trading renaissance, and PayPal wants to reap the benefits from this renaissance, or at the very least doesn’t want to have FOMO. That’s why it has incorporated cryptocurrency trading already on its platform for users who are interested in investing in the crypto market. While these plans to offer individual stock trading are still very unofficial, if the company were to partner with or buy an existing broker-dealer, that would be a major step in the right direction. However, it would take some time for PayPal to offer a trading service, because the company would need to complete a new membership process through the industry’s main regulator, FINRA, which could take up to eight months or more.
This kind of move would heat up the financial tech industry and make things extremely competitive between companies like PayPal, Robinhood, Square, and SoFi — companies that offer similar products and services and that describe themselves as a one-stop shop for all things financial.
As I mentioned before, PayPal has been around for decades. Users and potential users are very familiar with the PayPal brand and its resilience, so I believe once this news becomes official, the company could very well experience a boost in its shares and maybe even get some new investors on board.
Until next time,