PayPal: Sell Now To Avoid Growth Challenges In 2025
Summary
- Despite mild positive beats in Q4 results, I have a pessimistic outlook on PayPal due to poor revenue quality via stagnant active account growth and falling transactions per active account.
- I expect revenue growth challenges to persist in FY25, driven by Braintree renegotiations that would lead to further volume declines in transactions per active account.
- On the positive side, the Company's credit risk metrics have improved, and the stock trades at a 27% discount to peers on a 1-yr fwd PE basis.
- Overall, given the uninspiring revenue outlook and bearish technical chart setup, I rate PYPL stock a 'Sell,' expecting it to underperform the S&P 500 in the months and quarters ahead.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of VOO 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.
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