Why PayPal Stock Was Surging This Week
Key Points
It announced a time-limited cash-back program that covers the holiday season.
The financial services mainstay also rolled out an advertising initiative targeting small businesses.
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Investors have been extremely willing to pay for PayPal (NASDAQ: PYPL) stock over the past few trading days. They were cheered by the announcement of not one, but two initiatives that, if managed well, will sharpen the company's competitive edge. This helped push its stock up by over 9% week to date as of Thursday night, according to data compiled by S&P Global Market Intelligence.
Buy now, profit later
The first initiative was made public on Monday. PayPal announced that it was launching a 5% cash-back program for users taking advantage of its buy now, pay later (BNPL) service. This is to remain in force from that day until the end of this year.
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BNPL has become a go-to option for many American consumers feeling the strain of rising prices. PayPal's offer seems well timed for the holiday season and should see a decent level of take-up.
The following day, the financial services company introduced a new service, this one targeting small businesses rather than consumers. Its PayPal Ads Manager allows such enterprises to hook into an advertising network and draw revenue from the activity.
2 more reasons to like the stock
While neither of these programs is going to power PayPal's fundamentals into the stratosphere, they're going to make the company's platform at least a bit stickier (if only temporarily, in the case of the time-limited BNPL cash-back arrangement). Any added engagement is a positive, so investors were right to cheer the two news items.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.
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