PayPal (PYPL): Evaluating Valuation After Launching Advanced AI Features in PayPal Honey

PayPal Holdings is capturing attention with the rollout of advanced AI features in PayPal Honey. These upgrades are aimed at making product research and shopping smoother for users. The new tools offer personalized deals and comparisons within AI-powered chats, helping to connect browsing and buying more seamlessly.

See our latest analysis for PayPal Holdings.

It has been an eventful stretch for PayPal, with the company expanding its AI-driven shopping features and deepening partnerships, such as its $7 billion BNPL deal and major integration with Google’s services. However, the momentum has not carried over to the stock’s longer-term performance, with PayPal’s one-year total shareholder return sitting at -11% and weaker results stretching back several years, despite recent product innovation and management’s focus on new revenue streams.

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With shares trading around 20% below average analyst price targets and recent innovations accelerating, investors must now ask: does PayPal’s current valuation reflect lingering skepticism, or is there still meaningful upside ahead?

Most Popular Narrative: 34.5% Undervalued

PayPal’s last close at $68.93 sits well below the most popular narrative's fair value estimate of $105.25, hinting at missed potential according to the narrative by Zwfis. The narrative builds on optimism about new products like Venmo and PayPal World, as well as major merchant-focused features. It anchors its valuation on bold future profit expansion under new leadership.

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/growth. The first is by having new/more businesses adopt PayPal's different tools for merchants to use them as a transactional service; that means that for every purchase within that company PayPal will be earning a fee for every single use.

Read the complete narrative.

Venmo’s new role and PayPal’s merchant ambitions drive this high valuation. The magic number here is the bold profit trajectory projected in the narrative. Think their future earnings engine will outpace market expectations? The full narrative reveals the forecasts and levers behind this valuation jump. See what’s fueling the optimism.

Result: Fair Value of $105.25 (UNDERVALUED)

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

However, execution risks remain if PayPal stumbles on product adoption or faces intensifying competition. This could temper the narrative’s bullish forecasts for growth.

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

Build Your Own PayPal Holdings Narrative

If you see the story differently or want to dig deeper into the numbers yourself, you can build your own perspective in just a few minutes. Start here: Do it your way

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding PayPal Holdings.

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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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