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PYPL

PayPal Holdings NasdaqGS:PYPL Stock Report

Last Price

US$96.26

Market Cap

US$111.3b

7D

8.7%

1Y

-65.4%

Updated

08 Aug, 2022

Data

Company Financials +
PYPL fundamental analysis
Snowflake Score
Valuation3/6
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$96.26
52 Week HighUS$296.70
52 Week LowUS$67.58
Beta1.49
1 Month Change31.09%
3 Month Change22.24%
1 Year Change-65.39%
3 Year Change-6.29%
5 Year Change62.99%
Change since IPO162.22%

Recent News & Updates

Aug 02

PayPal: On The Right Path To Growth

Finally, PayPal's management has cut its guidance to more achievable targets. As a result, it will be a relief from volatility due to negative surprises. The current strategy to focus on client engagement rather than new account opening is a step in the right direction. PayPal’s SuperApp has the potential to put the company way ahead of its competitors by increasing users' engagement and convincing them to keep their money within PayPal’s digital wallet. PayPal's unbranded payment gateway company, Braintree, demonstrated strong volume growth of 79% last year and remains one of the growth catalysts for the future. paypal.com's traffic data suggest a muted growth for the quarter, but the 24 downward revenue revisions provide ground for positive but limited surprise. Investment Thesis PayPal Holdings, Inc. (PYPL), the digital payments solutions provider, was investors' hot favorite as the fintech industry flourished during COVID due to extremely low borrowing costs and increased consumer spending. However, after reaching a peak of $308.5 in July 2021, the stock has been facing a lot of bashing and currently hovers around $88, down 54.6% YTD and around 72% from its all-time high. PYPL data by YCharts This downtrend resulted from numerous factors, such as multiples contraction in the tech sector, negative investor sentiments due to rumors of unrelated investments (intentions to buy Pinterest), disappointing Q3 and Q4 2021 results followed by revision of outlook and changes in strategy, etc. However, now that the management has cut its guidance to more achievable targets, there will be a relief from volatility due to negative surprises. On the one hand, I think the stock will still face headwinds in the near term as the e-commerce industry continues to struggle due to supply chain disruptions, record levels of inflation, and more returns to in-store shopping. In addition, eBay's move away from the PayPal platform has also been causing a loss in revenue. On the other hand, the market seems to have beaten the payment giant enough, and PayPal's business and growth strategies make it a very attractive long-term investment, supporting my buy rating. The Road To Becoming A Payment's Giant PayPal has been continuously investing in its growth to position itself as the market leader in the digital payments ecosystem that connects the consumer and merchants. Its platform has 429 million active accounts, including 35 million active merchant accounts, and it processes over a trillion payments annually. Through strategic acquisitions, it has expanded its products and offerings on both the consumer and merchant side. These offerings include payment processing, gateway, P2P, remittances, and related services such as POS, lines of credit, invoicing software, etc. In addition, the recent strategy to focus on client engagement rather than new account opening is a step in the right direction. Now, PayPal has ample infrastructure in place to keep payments revolving within its ecosystem and increase revenues through higher user engagement. PayPal's Evolution (investor.pypl.com) The All-in-one Digital Wallet: PayPal's SuperApp has the potential to put the company way ahead of its competitors. The market criticized the all-in-one app when it was launched in 2021. It was said that the US market did not need a super app, a concept quite famous in China and other Asian markets. However, the reality is that an all-in-one app is what the company now needs to boost user engagements and keep payments within its platform to increase margins. Some new app features such as Bill Pays, coupons/deals, high-yield saving accounts, crypto buying and selling, and QR codes are already rolled out. Other features that were initially planned, such as stock offerings and other crypto-related features, will take some time, subject to regulatory approvals. With these many features on one app, the user can essentially perform all kinds of financial transactions through PayPal's digital wallet. On top of that, choosing Buy Now Pay Later ((BNPL)) will further increase consumer spending through PayPal, as the BNPL industry is relatively new and expected to grow in the coming years. This will increase engagement and convince the users to keep their money within PayPal's digital wallet rather than using it just for checkout purposes. PayPal's Engagement Metric (investor.pypl.com) Unbranded Processing Business is Growing Braintree, the unbranded payment gateway and processor, owned by PayPal Holdings, has recently seen strong growth. While the company doesn't share exact volume, the management claims Braintree's volume growth was 79% last year, and the trend also remained strong in the first quarter. Among the Braintree platform's famous merchant users are Airbnb, Dropbox, Eventbrite, GitHub, yelp, etc. The management expects to have some more big names on board in the coming quarters. Braintree's integration into PayPal's up-to-date tech stack and the ability to allow payments through PayPal and Venmo makes it a very reliable payment processor. As a result, the growth prospects for this business are strong. Venmo's Monetization Strategy Is On Track Venmo is another success story of PayPal's strategic investment, and the growth expected from the app is phenomenal. Initially allowing P2P payments, Venmo now keeps on adding features to its app. Users can now set up business profiles to receive payments or pay at more than 2 million PayPal merchants across the United States. Venmo's TPV was $57.8 billion in Q1 2022, a 12% YoY growth. Venmo also allows its users to buy and sell four cryptocurrencies; thus, there is room for increasing fees on Venmo to be at par with market rates. Another milestone that will be very meaningful to Venmo's growth is its partnership with Amazon, whereby Amazon will allow payments through Venmo on its platform. Another thing to note is that the company has been aggressively buying back shares in recent quarters. Specifically, according to the CFO in the Q1 buyside call: You've seen us be more aggressive on buybacks the past few quarters; I'd expect that we would be buyers at this price. We think the intrinsic value of our business is far more than where we trade today.

Shareholder Returns

PYPLUS ITUS Market
7D8.7%3.0%1.1%
1Y-65.4%-28.3%-13.0%

Return vs Industry: PYPL underperformed the US IT industry which returned -28.1% over the past year.

Return vs Market: PYPL underperformed the US Market which returned -12.9% over the past year.

Price Volatility

Is PYPL's price volatile compared to industry and market?
PYPL volatility
PYPL Average Weekly Movement8.6%
IT Industry Average Movement10.0%
Market Average Movement7.9%
10% most volatile stocks in US Market17.1%
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$111.32b
Earnings (TTM)US$2.06b
Revenue (TTM)US$26.39b

54.1x

P/E Ratio

4.2x

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

3/6

Valuation Score 3/6

  • 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/Revenue4.3x
Enterprise Value/EBITDA24.4x
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 Average42.4x
FIS Fidelity National Information Services
70.5x22.9%US$59.6b
V Visa
30.9x12.3%US$441.3b
MA Mastercard
35.1x15.1%US$340.3b
FISV Fiserv
33.1x14.7%US$67.1b
PYPL PayPal Holdings
54.1x29.1%US$111.3b

Price-To-Earnings vs Peers: PYPL is expensive based on its Price-To-Earnings Ratio (54.1x) compared to the peer average (42.4x).


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 (54.1x) compared to the US IT industry average (30x)


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 Ratio54.1x
Fair PE Ratio50.7x

Price-To-Earnings vs Fair Ratio: PYPL is expensive based on its Price-To-Earnings Ratio (54.1x) 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 ($96.26) is trading below our estimate of fair value ($137.1)

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 more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


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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


29.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PYPL's forecast earnings growth (29.1% per year) is above the savings rate (1.9%).

Earnings vs Market: PYPL's earnings (29.1% per year) are forecast to grow faster than the US market (12.8% 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 (20.9%)


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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 (19.8%).


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 ($USD32.07M) is above average for companies of similar size in the US market ($USD12.96M).

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$111.322b
  • 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 Analysis2022/08/08 00:00
End of Day Share Price2022/08/08 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.