PayPal makes Venmo standalone unit amid takeover interest
What's the story
PayPal is restructuring its business to create three distinct segments, including making Venmo a standalone unit, according to CNBC. The move comes as the company faces takeover interest from potential buyers like Stripe. Venmo is seen as PayPal's most valuable and acquirable asset. The restructuring also comes after two senior executives are departing from the company.
Business transition
Venmo to become a standalone segment
Under the new structure, Venmo will be its own segment within PayPal. This will make it easier to monitor its performance or sell the business if needed. PayPal is also looking for a digital banking executive to head this new Venmo segment. The other two segments in the restructuring are a PayPal-branded business for merchants and consumers, and a payment services unit with Braintree and crypto operations.
Market dynamics
Venmo's user base and executive departures
PayPal has been losing ground to Apple, Google, and Stripe in the e-commerce transaction space. Its stock has plummeted by some 80% from its pandemic-era peak, drawing interest from potential buyers such as Stripe. The company has hired bankers to prepare for possible takeover bids or activist campaigns. Despite these challenges, PayPal shares rose by nearly 3% after CNBC's report on the restructuring plans.
Leadership changes
New leadership for AI transformation group
Venmo, with nearly 100 million users, is seen as PayPal's most valuable standalone asset due to its growth prospects. The restructuring has also led to the departure of two key executives: Diego Scotti and Michelle Gill. A new artificial intelligence (AI) transformation group will be headed by Anshu Bhardwaj, a former Walmart tech executive. Scott Young, a former Goldman Sachs consumer banking manager, will run a financial services unit supporting the other main business segments.