Paypal Holdings Inc (NASDAQ:PYPL) has announced what it described as a proposed quarterly dividend of 14 cents per share (pending approval), although as of this writing, the payment has not yet been executed. PayPal has historically not paid a dividend. On Tuesday, the company confirmed that users of ChatGPT will soon be able to utilize PayPal for checkout purposes under the new partnership, expected to roll out in the coming months, and payments will also be processed for vendors employing OpenAI's Instant Checkout feature.
CEO Alex Chriss emphasized that the partnership with OpenAI aims to streamline transactions, enabling quick payments via an AI-assisted platform. This initiative aligns PayPal with other notable companies like Etsy and Shopify, both of which have also collaborated with OpenAI. Following the announcement, PayPal's stock surged by 14% in premarket trading.
In addition to this, PayPal provided updated revenue expectations for its peer-to-peer service, Venmo, projecting approximately $1.7 billion for the year. This marks a notable increase from the $900 million reported in 2021. The company reiterated plans for a proposed dividend of 14 cents per share, pending board approval and confirmation of payment dates.
Further boosting investor confidence, the company raised its forecast for transaction margin dollars, estimating between $15.45 billion and $15.55 billion, up from prior expectations.
#Investor Takeaway
The introduction of a dividend signals a new approach in PayPal's strategy to return value to shareholders.
#Market Impact
PayPal's stock performance is likely to benefit from increased investor confidence due to its dividend announcement and improved revenue guidance. The partnership with OpenAI could further enhance its payment processing capabilities, fostering future growth.
#What’s Next
Investors should monitor upcoming earnings reports and any additional strategic announcements from PayPal regarding its partnership with OpenAI and Venmo's growth metrics.