PayPal (PYPL) $69

Industry/Sector/Type - - - Payments/Finance/Cyclical

Biggest catalyst for the stock - Deserving a better valuation as a mature cash rich high earnings business. It is trying to build an ecosystem around PayPal/Venmo/Crypto.

Positives

Valuation - With a forward P/E of just 13.6x , with 10-11% earnings growth for the next 3 years, PayPal’s risk/reward profile looks very attractive.

Integration with Venmo: PayPal’s integration of Venmo and global wallet partners Mercado Pago, Tenpay Global, and UPI is finally underway, and should have been done years ago could expand its addressable market

Paypal raised guidance for volumes and earnings for 2025, but the markets haven’t responded. Bulls could benefit from a post earnings bump shout there be a sufficient beat.

It has a $15Bn Buyback in place

Negatives

The stock performance has been terrible, negative 66% in the last 5, and negative 14% in the past year, and I say that as someone who held for a few years and gave up at a loss.

It is labelled as a legacy/mature tech company with very middling growth for two reasons.

a) Size - $33Bn growing to $40Bn in 3 years and earnings growing only at 12-14%

b) Not enough branding power with the younger generation of customers.

Paypal always had BNPL, yet it's not recognized as a strong brand in BNPL, which is the growing segment to be in.

It also lost heavily to Square, Stripe and newer players who made it simple, PayPal seemed clunky.

Return

1 Year -14% 5 Year -66% 10 Year 95%

Is it worth buying? - the good thing is that there is limited downside from this price but I would be surprised if it returned more than 8-10% a year with its limited growth prospects.