PayPal Is Down 80% From All-Time Highs: Is PYPL Stock a Buy Now?
13 Setembro 2023 - 8:20AM
Finscreener.org
Basketball enthusiasts often
resonate with the phrase, "ItU+02019s a game of runs." It conveys
that no team consistently holds the upper hand throughout a game —
they experience peaks and troughs.
In a similar vein, stock markets
echo this pattern. Regardless of its prowess, no company can boast
of a perpetually upward trajectory — they too, experience
volatility due to multiple factors.
This cyclic nature is why a stock
can be a promising pick for long-term investors, even when it is
navigating turbulent waters, given the company possesses the
attributes for a rebound. LetU+02019s delve into the trajectory
of PayPal Holdings (NASDAQ:
PYPL), a stock that has
faced headwinds since January 2022 and is down 80% from all-time
highs.
Here’s a breakdown of why this
fintech behemoth remains a compelling long-term investment
choice.
Why is PayPal stock down?
The efficacy of a companyU+02019s
leadership, particularly its CEO, is paramount in driving its
success. Dan Schulman, who has steered PayPal since 2014, is
nearing the end of his helm. Given the companyU+02019s admirable
performance under his stewardship, a sense of uncertainty among
investors about its future trajectory is natural. However,
leadership transition is one of many challenges PayPal has grappled
with recently.
Following an unprecedented surge
during the initial phase of the pandemic, thereU+02019s been a
noticeable deceleration in PayPalU+02019s momentum — both in terms
of revenue growth and the influx of new active accounts.
Economic challenges have
undeniably impacted PayPalU+02019s performance. The companyU+02019s
revenue is primarily generated from transaction fees. In the past
18 months, a sluggish macro environment has led to fewer
transactions and dampened this revenue stream. Moreover, valuation
concerns emerged as PayPalU+02019s stock appeared somewhat
overpriced, leading to a possible necessary correction.
However, hereU+02019s why
thereU+02019s optimism for PayPal and its potential to offer
substantial returns for long-term investors:
Many of the challenges faced by
PayPal are temporary or addressable. Economic downturns donU+02019t
last indefinitely. As economic conditions improve, it is likely to
uplift PayPalU+02019s performance. Additionally, PayPal has
announced its new CEO, Alex Chriss, is slated to assume his role by
the end of September.
Currently serving as an executive
at Intuit (NASDAQ: INTU)
— a company providing financial services to individuals,
entrepreneurs, and small to medium-sized businesses — Alex Chriss
boasts an impressive tenure of 19 years.
He ascended through
IntuitU+02019s hierarchy and has been helming the companyU+02019s
unit catering to small businesses and self-employed professionals
since January 2019. Under his leadership, this segment witnessed
robust growth, expanding its customer base and revenue at compound
annual rates of 20% and 23%, respectively.
Given this, PayPalU+02019s
incoming CEO brings a rich experience in business and
consumer-centric financial services, precisely the kind of
expertise the company
requires at its helm.
Is PYPL stock a good buy?
PayPal offers consumers a swift
and seamless payment experience with merchants while providing
businesses with tools for risk management, data-driven strategies
to boost conversions, and more. As of the last report at the close
of the second quarter, PayPal boasted 35 million merchant accounts
and a whopping 400 million consumer accounts. This underlines a
significant strength of PayPal: its network effect. Essentially, as
more individuals use its platform, its value escalates.
The growth in the consumer base
makes it more appealing for businesses to join, and the same holds
true in reverse. Over time, with a consistent increase in users,
particularly under the leadership of a CEO adept at launching
customer-centric products – which the new CEO, given his tenure at
Intuit, seems primed to deliver – PayPalU+02019s user accounts are
poised to surge. An additional feather in PayPalU+02019s cap is its
strong brand reputation.
Having established itself as a
trailblazer in the fintech domain, PayPalU+02019s name has become
synonymous with the industry. With e-commerce on an upward
trajectory and the increasing shift towards digital payment
methods, the fintech sector is primed for rapid growth. Given
PayPalU+02019s inherent advantages, coupled with its leadership
transition, the future looks promising for the company to yield
enhanced returns.
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