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PayPal: Turnaround Story At An Attractive Valuation

Sep. 19, 2023 12:30 PM ETPayPal Holdings, Inc. (PYPL)ADYEY, ADYYF, COIN, GPN, MA, SQ, TOST, V49 Comments
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  • PayPal's stock has fallen significantly over the past two years, presenting an attractive opportunity for investors.
  • The company has shifted its focus to share buybacks instead of aggressive acquisitions, capitalizing on its available cash reserves.
  • PayPal's valuation is favorable compared to its peers, and its venture into the cryptocurrency market presents growth opportunities.
  • Due to the interesting risk/reward we currently rate PayPal as a strong buy.
PayPal To Cut Staff By 7% In Coming Weeks

Justin Sullivan


PayPal (NASDAQ:PYPL) got slaughtered over the last two years. PYPL has fallen as much as 81% from its ATH to its current bottom on the 18th of August 2023. This is one of the stocks of higher quality that is now

This article was written by

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Follower of the markets. My investment style is mostly looking for asymmetrical risk/reward opportunities on the long and short side. I utilize a mixture of stock and derivatives positions in my investment approach. The time horizon of my investments varies.For some more investment insights or if you want to message me, feel free to do so on Twitter: https://twitter.com/Stock_Inf0

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 (49)

Murad Shawar profile picture
Long Paypal I personally think they are doing the best thing buying back shares over time and personally easily see this being 200$ by 2030 Turnarounds take time but if successful easily 200$ in 7 years . PAYPAL isnt going anywhere they are synonomys with online payments and secure .
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@Murad Shawar Thanks for reading, Murad!

Best of luck.
Why call this a turn around story? PayPal are already doing great, it's just the stock that is pushed down because of fear for the future.
NOW is a good time? I have read a gazillion articles for the last 3 years saying NOW is a good time, only for the stock price to continue to slide awe-inspiringly. Wait it out folks. Without an ability to get new customers, no new ideas on how to use its capital and a crowded market with competitors taking PYPL’s market share, I believe it won’t take much to have another $10 - $20 shaved off the current $60. Can you imagine where the stock price would be if they didn’t embark on stock buybacks? A dinosaur that doesn’t know where to put the capital it amassed with its first movers advantage whilst competitors are nipping at its heels and eating its lunch is not a good bet. My only question is WHY would anyone need to buy this non-dividend paying stock now when there are so many better stocks to choose from. I won’t even mention the implosion that awaits from its foray into a stablecoin, an area its Management clearly knows very little about and how to mitigate its risks.
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@JT4587 Thanks for reading.

The risk/reward is interesting here. Could it drop further? Yes, I have no glass ball, but I believe they will be able to turn the business around.

What stocks do you think are more attractive at this moment in time?

Best regards,
Pearl Gray Equity and Research profile picture
fair enough, good analysis.
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@Pearl Gray Equity and Research Thanks for reading!

I appreciate the kind words.
Clauser1960 profile picture
SkimPal is useless
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@Clauser1960 Thanks for reading.

Could you elaborate more on that? I would be happy to discuss this with you, but I think it would be helpful if you go a bit more in-depth on why you believe this is the case.

Best of luck.
martininvestment profile picture
I like their records low valuation … I’m buying looking into 2025 .

I love this :

Revenues +- / year

Visa : $30B / year
Mastercard : $22B / year
Discover : $14B / year
Amex : $55B / year

PYPL : $28B / Year & counting ! should finish around $30b / year in 2023

it is a tendency t disregard paypal as a player .
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@martininvestment Thanks for reading!

Thanks for adding this interesting information to the conversation, it is much appreciated!

Best of luck!
Frank Thomas in Florida profile picture
Paypal is the #1 processor of digital payments. Paypal is ubiquitious amongst people and merchants that process electronic payments. Revenues and profits are growing. P/E ratio is around 16. Shares are being bought back. Probably going to take another quarter or two. At some point, more value investors will pile in and move shares higher
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@Frank Thomas in Florida Thanks for reading, Frank Thomas!

Exactly, PayPal is still king. Obviously, competition is intensifying but PYPL remains number 1. However, the whole sector is under pressure and it could take a while before the company is able to reaccelerate its growth.

Best of luck!
ovatekweb profile picture
Another woke fatality. We shutdown. Our business and my personal account with them when they threatened conservative speak. Go woke go broke. So many people underestimate the damage what they did caused. Accounts were closing by thousands and thousands. Good riddance. They will never recover to where they were
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@ovatekweb I don't understand why you mention "Go woke go broke" here. Could you elaborate on that? Sure PYPL might have made some mistakes in the past, but go woke go broke doesn't necessarily apply here IMO.
@Stock Info yes, it does. they threatened to close people's accounts because of differing opinions. you don't close somebody's bank account because of their political view. that is a key quality of a fascist system. fascism being when government and private companies unite against the people.

if you write about paypal, you HAVE to know this! maybe you read the wrong newspapers/websites...

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@Meddlecat I'm aware of the account closures and PYPL definitely communicated this in the wrong fashion.

Nevertheless, I think PYPL stock has been punished for this and management seems to understand their mistakes.
Great thoughts! Loaded 1600 Shares $PYPL
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@Shivan217 Thanks for reading, Shivan!

Nice position!

Best of luck!
Great insights.I recently took positions between 58-64 and have over 1000 shares. I am planning to sell covered calls against the position to get income .I just want to make sure it doesn’t reach the strike price 115 by 06/21/24.
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@Pradiyie Thanks for reading!

That's quite a big position you have there. Writing covered calls against them seems like a smart idea to mitigate the risk. If the stock moves close to the strike price and you don't want to lose your shares, make sure to roll out the covered call further in time and at a higher strike price.

I'm currently long multiple LEAPS with expiration in January of 2025.

Best of luck!
Trader 611 profile picture
I have a PYPL account but never use it. Seems like an irrelevant company to me. I have an EBay account as well and there appears to be no connection or benefit to PYPL. Don’t really understand how they make money or what their business model is.
Trader 611 profile picture
@Trader 611 therefore, I cannot justify investing money here. Peter Lynch style
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@Trader 611 Thanks for reading!

PayPal was split off of Ebay. That's the connection they have.
@Trader 611 PayPal has struggled to connect its services in meaningful ways I agree. Venmo for example despite its position as a market leader and more affluent user base, makes less money than CashApp already for example.
JF1970 profile picture
Not a bad price to buy PYPL; I should be a buyer under $60; but if you believe SPX is on a downtrend, more patience before buying will be rewarded.
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@JF1970 Thanks for reading.

It will remain to be seen. Nonetheless, if PYPL is able to reaccelerate its growth it could be a real banger.

Best of Luck!
I used to really like PayPal, but I sold out when they switched to share buybacks.

The space is too competitive, If you aren't going to innovate in the fintech space your going to be made irrelevant. In PayPal's case, slowly irrelevant. Maybe the new CEO switches strategies, but until then I'm out.
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@Rleaton Thanks for reading!

The space definitely got a lot more competitive. Still, PYPL is priced like they won't see much future growth. Meanwhile, the company is still a cash generating machine and the share buybacks will be beneficial for shareholders especially at these levels.

Furthermore, I think Alex Chriss has what it takes to turn this business around, but that remains to be seen for now.

Nevertheless, the R/R is quite interesting here.

Best of luck!
@Stock Info I know some shareholders are obsessed with share buybacks but if you think your business is still in the growth stage of its lifecycle, they are a terrible use of capital. To me this is PayPal waiving the white flag on growth and now just trying to say "hey look how cheap we are!" Yes it will drive eps growth, but to me it looks like they are starting to lose market share. Aka this looks like a value trap to me.

Will keep an eye on what the new CEO has in store, but as of right now I'm not excited about PayPal's prospects

That said, I enjoy your writings. Thanks for the article
Stock Info profile picture
@Rleaton You definitely have a point here!

We should definitely give it a few quarters to see if they will be able to turn it around.

I see you often in my comment section. I really appreciate you! Any company specifically that you want me to analyze?
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