Please ensure Javascript is enabled for purposes of website accessibility

Here’s Why PayPal Stock Is Rising on Friday

By Matthew Frankel, CFP® - Mar 13, 2020 at 11:24AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The payment processing giant is rebounding nicely after a rough week.

What happened

A day after the worst stock market decline since 1987, the major indexes are rebounding nicely, with the vast majority of stocks in the green. As of 10:50 a.m. EDT on Friday, the Dow Jones Industrial Average, S&P 500, and Nasdaq were all higher by more than 3%, mainly fueled by hopes of a government stimulus to combat the COVID-19 coronavirus' effects on the economy.

One fintech stock that's having a particularly strong day is payment processing giant PayPal (PYPL 2.23%), which is up by about 6%, roughly doubling the gains of the broader market.

Woman shopping online.

Image source: Getty Images.

So what

Financial stocks, such as banks, insurance companies, and fintechs, have been some of the hardest hit by the recent downturn. Plunging interest rates make it harder for banks to earn a profit on loans and for insurers to profit from investments, and fears of a slowdown in consumer spending are also bad for all companies depending on payment activity.

Obviously, this includes PayPal. The company relies on payment volume to generate revenue, and lower consumer spending would obviously hurt. But economic stimulus is designed to inject more money (and spending) into the economy, so PayPal's problem could end up not being as bad as initially thought.

Now what

Having said all that, we don't know (at the time of this writing) exactly what measures the government plans to take, and there's still no way of knowing how long or deep the economic downturn will end up being. A stimulus would certainly be a positive catalyst for PayPal, but the company is by no means out of the woods yet.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PayPal Holdings, Inc. Stock Quote
PayPal Holdings, Inc.
$71.40 (2.23%) $1.56

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.