A Look at PayPal’s Valuation Following Its Landmark Liverpool FC Digital Payments Partnership

PayPal Holdings just landed its first major partnership with a Premier League club by announcing a global, multi-year deal with Liverpool FC. This move makes PayPal Liverpool’s official digital payments partner and introduces new ways for fans to connect.

See our latest analysis for PayPal Holdings.

Despite upbeat news lately, including this Liverpool FC partnership and PayPal’s expanded European BNPL agreement, the momentum has been mostly negative. The stock sits at $60.57 after a disappointing 1-year total shareholder return of -30%, and even longer-term total returns show a declining trend. Recent moves are raising the bar for future growth, but the market is yet to reflect immediate optimism in the share price.

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With PayPal stock trading at a significant discount to analyst targets despite new partnerships and solid growth, is the market overlooking a value opportunity here, or has it already priced in all hopes for a turnaround?

Most Popular Narrative: 42.5% Undervalued

According to Zwfis, the narrative’s fair value estimate for PayPal Holdings stands far above the current share price. This suggests substantial upside potential. This conclusion is built from a granular dissection of revenue drivers and future margin improvements that capture where the business could head from here.

The biggest thing that makes me think PayPal is going somewhere is along the lines of their PayPal open, which is centralized around merchants being able to use PayPal for transactions with customers. As they are able to gain more traction with this, they are bringing in two big sources of revenue and growth. The first is by having new or more businesses adopt PayPal's different tools for merchants, allowing them to use PayPal as a transactional service. That means that for every purchase within that company, PayPal will be earning a fee for every single use. How I look at this is a lot like how Visa charges fees to companies for customers using Visa in their stores. If they are able to spread this out to a greater scale, they could be hitting a storm of recurring revenue that just grows by the day.

Read the complete narrative.

Curious what bold revenue growth assumptions unlock this target? There is a secret inside this narrative: a roadmap to recurring income and next-level margins that could reshape PayPal’s future. Which accelerating platform lies at the narrative’s core? Discover the fascinating leap in financial projections that power this valuation story.

Result: Fair Value of $105.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, uncertainty remains if PayPal’s ambitious growth plans stall or if competition erodes margins faster than management can deliver on new initiatives.

Find out about the key risks to this PayPal Holdings narrative.

Build Your Own PayPal Holdings Narrative

If you're not convinced by the above, or if you’d rather dig into the numbers yourself, you can easily craft your own view in just minutes. Do it your way

A great starting point for your PayPal Holdings research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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