Headquarters in Chiyoda, Tokyo
Paypay Headquarters in Chiyoda, Tokyo

PayPay's American depositary shares were up $1.01, or 6.92%, at $15.67 in late-morning trading on the Nasdaq. The company has a market value of about $10.6 billion.

Options expiration cited

PayPay did not release any company news on Friday.

Investing.com attributed the gain in part to the expiration of a closely watched options position. A put option expiring Oct. 16 with a strike price of $7.50, about half the stock's recent trading level, had carried some of the highest implied volatility of any equity option as of late September, suggesting some traders were positioning for a steep decline. With the option expiring, that pressure eased.

The move came as the broader market showed little direction, with the Nasdaq composite slightly lower.

Earnings ahead

PayPay is expected to report its next quarterly results around Oct. 30.

In its most recent quarter, the company reported earnings that beat analyst expectations, with revenue also topping forecasts.

Analysts are broadly bullish on the stock, with an average price target of about $24, well above the current share price, according to Yahoo Finance data. Wolfe Research raised its price target to $21 from $18 in August while maintaining an Outperform rating.

Japan's leading payment app

PayPay, headquartered in Tokyo, operates Japan's most widely used mobile payment app, which allows users to pay at stores using QR and bar codes. It has expanded into credit cards, banking and other financial services.

The company is controlled by SoftBank, and insiders hold about 90% of shares outstanding, leaving a relatively small float for public investors.

Rough start as public company

PayPay went public in the United States in March, pricing its initial public offering at $16 per share, below its expected range. The stock has since traded as high as $24.89 but has fallen in recent weeks and is down about 19% from a year earlier on a comparable basis.

What's next

Investors will look to the upcoming earnings report for updates on user growth, transaction volumes and the expansion of financial services, as well as progress on partnerships aimed at broadening the app's reach.