PayPal shares surge on upgraded outlook and OpenAI partnership news

Also announced a dividend payment of 14 cents per share, the first in 27 years since its founding

Stock, down 18% year-to-date, jumped 14% in pre-market trading

First-generation e-commerce payments firm PayPal announced that it has struck a deal to embed its digital wallet into ChatGPT through a partnership with OpenAI. Along with this, it raised its outlook for the year and said it would pay its first dividend since its founding 27 years ago, sending PayPal (ticker: PYPL) shares up 13% in pre-market trading on the U.S. stock market on the 28th (local time).

That day PayPal said that through its partnership with OpenAI it will connect its global seller network to ChatGPT so that users can purchase goods from ChatGPT. This means PayPal will provide payment technology that converts searches on ChatGPT into actual purchases.

AI shopping tools are emerging as the next wave of change in online retail, allowing consumers to autonomously research, compare, and purchase products.

These tools act as digital assistants that set budgets based on user preferences, evaluate reviews, and track prices over time.

PayPal CEO Alex Chriss said, "By partnering with OpenAI and adopting an agent commerce protocol, we will provide a payments and commerce experience that moves from chat to payment in a few taps."

Meanwhile, PayPal reported that it now expects full-year adjusted earnings per share (EPS) of $5.35–$5.39, up from the prior $5.15–$5.30 range. This surpasses analysts' estimate of $5.24. It said that on a currency-neutral basis, total payment volume grew 7% to $458.1 billion.

PayPal's board also approved a quarterly dividend of 14 cents per share. This represents a target payout ratio of 10% of adjusted earnings.

The company has restructured its business in recent years to prioritize profitability over aggressive revenue growth.

PayPal, which grew alongside the rapidly expanding online e-commerce market during the pandemic, has experienced a slump as consumers have returned to offline stores. Year to date, PayPal's stock has fallen about 18%.

PayPal shares surge on upgraded outlook and OpenAI partnership news

Guest reporter Jeong-ah Kim kja@hankyung.com