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PayPal: Set For A Big Rebound In 2022

Jan. 03, 2022 11:40 AM ETPayPal Holdings, Inc. (PYPL) Stock30 Comments
The Asian Investor profile picture
The Asian Investor
21.79K Followers

Summary

  • PayPal could achieve $50B in revenues by FY 2025.
  • PayPal's free cash flow is going to ramp up materially also.
  • PayPal’s commercial growth is undervalued.

PayPal logo and sign at company headquarters

Michael Vi/iStock Editorial via Getty Images

One of my best ideas for FY 2022 is PayPal Holdings (NASDAQ:PYPL). PayPal is looking at a significant increase in revenues and free cash flow in the next four years and the firm

This article was written by

The Asian Investor profile picture
21.79K Followers
I look for high-risk, high-reward situations. Five largest portfolio holdings: Bitcoin, SoFi, Alibaba, PayPal, Western Alliance. Early buyer of cryptocurrencies. I live in Thailand :)

Analyst’s Disclosure: I/we have a beneficial long position in the shares of PYPL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (30)

J
What a fabulous disaster! My friend loaded bunch at 205 and seeing blood every day. No hope till fall 2022 it seems for his to exit with profit! No sure how these folks do research :(
E
This aged as well as your BABA call
MrPink325 profile picture
Took a bunch at $213...will avg down at these prices and build a bigger position...love the cash flow and growth here...good write up as well, by the Canadian eh! Bout time! Also a Canuck in Asia. 😇
a
Bought pypl mid nov on a 'dip' at 211.80. Dropped to 187 about 9 days later..... should have exited the position in the upper 190s but thought it would bounce back....been selling weekly ccs for for the last 60 days and have taken my cost basis to 196 (it looked like the gap was going to close but .....still ouch, especially with the Friday drop to sub 180..... On Jan 7, when it was trading about 188, decided to sell the feb 18 170 strike cash secured put giving me $429 in premium and almost 12% downside protection...but with pypl below 180, i am now sweating this move and may compound my pain.... i like the fundamentals, but read daily about headwinds (general and specific to pypl). I need a hug.
C
@ata loss I think you just compounded your pain. I am getting crushed too as I loaded up at 200 thinking we were close to the bottom.
B
Typo >>PayPal's active accounts soared 15% year over year in the third-quarter to an all-time record of >>$416M<<
Tazym67 profile picture
The one area I am curious about is the BNPL programs. Just a blip now, but if the cash flow numbers get hit are not that high, and there are other issues. Future issue with rates, balances and regulation? Just curious what everyone thinks?
Alternative Investing profile picture
“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.”
― Warren Buffett
B
I play the charts. Definitely a huge drop from the highs, but it has been consolidating in the past month or so on large volume after the huge selloff since Sept 2021. Looks like 176-179 is support, if it goes below that could be a much larger drop to 110-125
The Asian Investor profile picture
@BayRidge Very large drop and there is really no real reason for it. Venmo/Amazon partnership is huge.
k
@The Asian Investor valuation? How would you value? It has earnings and has a growth rate...so what multiple would you put on earnings.
The Asian Investor profile picture
@kevn1111 I believe PayPal is a $300 stock and EPS could grow a lot faster with the partnership with Amazon.
S
SL15
04 Jan. 2022
thanks for the notes. Are they any specific competitor advantage we can draw on PayPal over competitors?
The Asian Investor profile picture
@SL15 The size of its platform and the growth of its merchant network. Also the Venmo/Amazon partnership.
F
more likely a tech bubble bursting
k
@Finding Your Retirement lol. Tech encompasses many areas. Lots of value in tech as well.
The Asian Investor profile picture
@Finding Your Retirement Why do you think PYPL was in a bubble?
F
@The Asian Investor run up in 2020 like all tech. then february 2021 straight downward on most tech companies. the big guys are the last to fall and then welcome to recession
M
I hope you are right. I own a lot of PYPL (full position and a hold) and took it on the chin like others. I think they need a new product offering to turn the corner again. Same with SQ.
The Asian Investor profile picture
@MojoRisin1 A lot of tech stocks are down big, this has nothing to do with PayPal.
NorEast Invest profile picture
As always spectacularly written and I 100% agree with your analysis. Keep it up and happy 2022 my man!
The Asian Investor profile picture
@Sandis Weil thank you very much for your support, as always, and I am looking forward to reading your articles this year :))
L
I have been adding PYPL over the last few months. I think at these levels it is definitely a buy for me. I am a long term investor and know PYPL will grow long term. What is your buy zone for PYPL?
k
@Lakeshow 2009 I just sold a Jan 21 Put at $190 for $3.50. So if it dips I will own at $186.50 - so is about 5% below where it was as it moved up today. If it dips to around $185 I will likely sell $180 put again.

I think anything under $200 is good. It is a long-term play, but given current environment I can see it getting beat up a bit. But those who sold in '21 are likely adding today.
k
@kevn1111 okay, with the drop today, I bought back at a loss, but then sold Feb 18 $180 for more than I just bought back by $0.55 and lowered the potential buy point by $10 or 5% ish. So essentially I have a Feb 18 $180 Put for $4.05. Will see how it plays out. But if I am put, the net will be $175.95.
The Asian Investor profile picture
@Lakeshow 2009 PayPal is now in the buy zone, $180 and we may see a bottom here...
k
I like PYPL. May start a position again
Reluctant Investor profile picture
@kevn1111 I did just that last month. $188. It’s my one non-momentum / recovery stock.
There are so many other hot stocks in tech sector so I’m not that optimistic with PYPL but I’m holding on for now. I’m already too heavy tech.
A
@Reluctant Investor If you're 'not that optimistic with PYPL' then why have a position at all? (Please don't take as a criticism: it's a genuine question). Disclosure: Long PYPL since $122 or so in April 2020.
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