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PYPL

PayPal Holdings NasdaqGS:PYPL Stock Report

Last Price

US$99.11

Market Cap

US$114.6b

7D

2.2%

1Y

-63.9%

Updated

11 Aug, 2022

Data

Company Financials +
PYPL fundamental analysis
Snowflake Score
Valuation2/6
Future Growth5/6
Past Performance1/6
Financial Health5/6
Dividends0/6

PYPL Stock Overview

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide.

PayPal Holdings Competitors

Price History & Performance

Summary of all time highs, changes and price drops for PayPal Holdings
Historical stock prices
Current Share PriceUS$99.11
52 Week HighUS$296.70
52 Week LowUS$67.58
Beta1.49
1 Month Change38.75%
3 Month Change25.73%
1 Year Change-63.91%
3 Year Change-5.57%
5 Year Change67.16%
Change since IPO169.98%

Recent News & Updates

Aug 09

Pay Up For PayPal? Activist Action, Macro Environment Present Catalysts

There are two potential catalysts for PYPL. We use a blend of fundamentals and technicals in our analysis to help identify how to use these catalysts. Follow along as we discuss the two catalysts: The current fundamentals for PayPal and how the macro economic environment may be favorable to a company like this. With PayPal trading at less than one-third of its all-time high, it may be time to take a look at the payments giant. I wonder if any reading this article are long-term owners of Paypal (PYPL) stock from its IPO days back in 2015. The original pricing was at $13/share. On July 6, 2015, the IPO came to market and the stock opened at $38. Over the next six weeks it chopped around before finding a low at $30 and has not looked back since. It would appear though that market conditions and sentiment have provided us with another potential long-term entry point. Should you pay up for PYPL here? What are the macro economic factors at play? How can technical analysis augment our view of the current picture and help provide us with a structure that identifies high probability entry and exit points? Let’s dive in. The Fundamental View: Stock specific and macro economic Our lead fundamental analyst, Lyn Alden, recently provided these comments regarding PYPL as a company: “With increased competition and slower growth, the company is transitioning more toward a growth-at-a-reasonable-price, "GARP" type of investment, rather than a fast grower. In line with this, the company recently announced a $15 billion multi-year share repurchase program.” FastGraphs And she added, “The balance sheet is solid, with an A- credit rating and little net debt. However, the success or failure of PayPal as an investment will mainly come down to one thing - can they improve their per-share growth metrics in an increasingly competitive field?” There's also the macro economic environment to consider. Please note these further comments from Lyn: FRED Charts “Additionally, the two-year Treasury yield has been losing upward momentum recently around 3%. Historically, the two-year Treasury yield is a good predictor of how high the Fed can raise interest rates, since the market begins anticipating and feeling out weakness in financial conditions well ahead of the Fed. See attached. If indeed the Fed runs into trouble raising rates much above 3%, it can let off some of the downward valuation pressure that has been on PayPal and similar companies. The market has already been pricing this into their forward expectations of Fed rate hikes, and I think the turnaround we've seen in a number of stock prices is beginning to reflect that. The key, then, is to find companies who won't have weaker earnings than analysts expect, but that are also likely past the period of earnings multiple contraction that higher rates and tighter financial conditions have contributed to. I believe PayPal may meet that dual criteria.” Seeking Alpha Potential Catalyst(s) for PYPL Stock Activist Action: It appears that the recent surge from the low of $67 is accompanied by speculation that Elliott Management, a well-known activist investment firm, has recently taken a stake in PayPal and may be advocating for possible changes. For more on this, see here. Markets tend to appreciate activist input as it can unlock value from lackluster businesses and convince management to make changes they would not otherwise be comfortable with. Could it be that these possible changes are forthcoming and will generate even more positive sentiment around PYPL stock? Macro Environment: The other catalyst is what Lyn mentioned and is quoted above. Should the macro economic environment continue to improve for companies like PayPal, they will greatly benefit as they're already favorably positioned. So, we actually see two potential catalysts for PYPL that are currently not fully appreciated by the market. The Technical View Whenever a market or a stock has been in a downtrend, it’s important to have a system to track and then project what's most probable next. Oversold markets can get more depressed and overbought markets can get more frothy. Irrationality works to both extremes. While there are many widely used methods for technical analysis, our preferred method is Elliott Wave (this is not to be confused with the activist firm Elliott Management mentioned at the outset). From the education section on our website, there is this brief explanation of Elliott Wave Theory: “Elliott Wave theory understands that public sentiment and mass psychology moves in 5 waves within a primary trend, and 3 waves in a counter-trend. Once a 5 wave move in public sentiment is completed, then it's time for the subconscious sentiment of the public to shift in the opposite direction, which is simply a natural cause of events in the human psyche, and not the operative effect from some form of “news.” In fact, the former Chairman of the Federal Reserve, Alan Greenspan, understood this fact well. During his tenure, in several hearings in front of the Joint Economic Committee, Mr. Greenspan noted that the idea that the Fed can prevent recessions is a "puzzling notion"... Rather, the stock market is “driven by human psychology” and “waves of optimism and pessimism.” For a more detailed understanding of this concept and application, I highly suggest reading Elliott Wave Principle, by Frost & Prechter.” Normally, we're able to analyze a stock or market at the inception of the first wave up or down and then set a Fibonacci Pinball structure (this is discussed in-depth in several articles here on this website) based on where the second wave retraces to. However, in the case of PYPL, to properly analyze the crowd sentiment, we must go back to where the IPO price originated, or rather $13, and not the open of public trading at $38. In doing so, the larger structure now makes much more sense. TradingView Using the overriding principle of a 5 wave progression, it appears that PYPL has completed a major 3rd wave rally at $309. The subsequent pullback was deep and long in duration. When the 2nd wave pullback is short in time and also shallow in depth, this can happen. Although it's a statistical outlier, shallow 2nd waves and deep 4th waves do happen about 10% to 12% of the time.

Shareholder Returns

PYPLUS ITUS Market
7D2.2%0.3%1.3%
1Y-63.9%-27.3%-11.7%

Return vs Industry: PYPL underperformed the US IT industry which returned -26.8% over the past year.

Return vs Market: PYPL underperformed the US Market which returned -11.6% over the past year.

Price Volatility

Is PYPL's price volatile compared to industry and market?
PYPL volatility
PYPL Average Weekly Movement8.5%
IT Industry Average Movement9.6%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: PYPL is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 9% a week.

Volatility Over Time: PYPL's weekly volatility (9%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
199830,900Dan Schulmanhttps://www.paypal.com

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company's payments platform allows consumers to send and receive payments in approximately 200 markets and in approximately 100 currencies, withdraw funds to their bank accounts in 56 currencies, and hold balances in their PayPal accounts in 25 currencies.

PayPal Holdings Fundamentals Summary

How do PayPal Holdings's earnings and revenue compare to its market cap?
PYPL fundamental statistics
Market CapUS$114.62b
Earnings (TTM)US$2.06b
Revenue (TTM)US$26.39b

55.7x

P/E Ratio

4.3x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PYPL income statement (TTM)
RevenueUS$26.39b
Cost of RevenueUS$14.92b
Gross ProfitUS$11.47b
Other ExpensesUS$9.42b
EarningsUS$2.06b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.78
Gross Margin43.47%
Net Profit Margin7.79%
Debt/Equity Ratio53.7%

How did PYPL perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is PYPL undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for PYPL?

Other financial metrics that can be useful for relative valuation.

PYPL key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue4.4x
Enterprise Value/EBITDA25.2x
PEG Ratio1.9x

Price to Earnings Ratio vs Peers

How does PYPL's PE Ratio compare to its peers?

PYPL PE Ratio vs Peers
The above table shows the PE ratio for PYPL vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average43x
FIS Fidelity National Information Services
72.2x23.3%US$61.1b
V Visa
30.6x12.3%US$436.7b
MA Mastercard
34.9x15.1%US$338.8b
FISV Fiserv
34x14.8%US$69.0b
PYPL PayPal Holdings
55.7x28.8%US$114.6b

Price-To-Earnings vs Peers: PYPL is expensive based on its Price-To-Earnings Ratio (55.7x) compared to the peer average (43x).


Price to Earnings Ratio vs Industry

How does PYPL's PE Ratio compare vs other companies in the US IT Industry?

Price-To-Earnings vs Industry: PYPL is expensive based on its Price-To-Earnings Ratio (55.7x) compared to the US IT industry average (30.3x)


Price to Earnings Ratio vs Fair Ratio

What is PYPL's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

PYPL PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio55.7x
Fair PE Ratio50.7x

Price-To-Earnings vs Fair Ratio: PYPL is expensive based on its Price-To-Earnings Ratio (55.7x) compared to the estimated Fair Price-To-Earnings Ratio (50.7x).


Share Price vs Fair Value

What is the Fair Price of PYPL when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: PYPL ($99.11) is trading below our estimate of fair value ($137.09)

Significantly Below Fair Value: PYPL is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is PayPal Holdings forecast to perform in the next 1 to 3 years based on estimates from 47 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


28.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PYPL's forecast earnings growth (28.8% per year) is above the savings rate (1.9%).

Earnings vs Market: PYPL's earnings (28.8% per year) are forecast to grow faster than the US market (14.5% per year).

High Growth Earnings: PYPL's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: PYPL's revenue (12.9% per year) is forecast to grow faster than the US market (8% per year).

High Growth Revenue: PYPL's revenue (12.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PYPL's Return on Equity is forecast to be high in 3 years time (20.7%)


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Past Performance

How has PayPal Holdings performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


19.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: PYPL has a large one-off loss of $1.1B impacting its June 30 2022 financial results.

Growing Profit Margin: PYPL's current net profit margins (7.8%) are lower than last year (20.4%).


Past Earnings Growth Analysis

Earnings Trend: PYPL's earnings have grown by 19.7% per year over the past 5 years.

Accelerating Growth: PYPL's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PYPL had negative earnings growth (-57.8%) over the past year, making it difficult to compare to the IT industry average (20.7%).


Return on Equity

High ROE: PYPL's Return on Equity (10.4%) is considered low.


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Financial Health

How is PayPal Holdings's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: PYPL's short term assets ($55.3B) exceed its short term liabilities ($45.1B).

Long Term Liabilities: PYPL's short term assets ($55.3B) exceed its long term liabilities ($12.9B).


Debt to Equity History and Analysis

Debt Level: PYPL's net debt to equity ratio (6.6%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if PYPL's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: PYPL's debt is well covered by operating cash flow (56.4%).

Interest Coverage: PYPL's interest payments on its debt are well covered by EBIT (21.2x coverage).


Balance Sheet


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Dividend

What is PayPal Holdings's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate PYPL's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate PYPL's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if PYPL's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if PYPL's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as PYPL has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

2.4yrs

Average management tenure


CEO

Dan Schulman (64 yo)

7.08yrs

Tenure

US$32,070,353

Compensation

Mr. Daniel H. Schulman, also known as Dan, has been the President of PayPal Holdings, Inc. since September 30, 2014 and has been its Chief Executive Officer since July 2015 and served as Chief Executive Of...


CEO Compensation Analysis

Compensation vs Market: Dan's total compensation ($USD32.07M) is above average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: Dan's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

Experienced Management: PYPL's management team is considered experienced (2.4 years average tenure).


Board Members

Experienced Board: PYPL's board of directors are considered experienced (7.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: PYPL insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

PayPal Holdings, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: PayPal Holdings, Inc.
  • Ticker: PYPL
  • Exchange: NasdaqGS
  • Founded: 1998
  • Industry: Data Processing and Outsourced Services
  • Sector: Software
  • Implied Market Cap: US$114.618b
  • Shares outstanding: 1.16b
  • Website: https://www.paypal.com

Number of Employees


Location

  • PayPal Holdings, Inc.
  • 2211 North First Street
  • San Jose
  • California
  • 95131
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/11 00:00
End of Day Share Price2022/08/11 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.