PayPal Stock Poised for Rebound Due to Attractive Valuation and Ongoing Business Growth Despite Recent Underperformance
The article discusses the stock of PayPal Holdings (NASDAQ: PYPL). The author gives the recommendation to buy PayPal stock, stating that its underperformance provides a compelling investment opportunity.
The author's core argument is that PayPal's long track record of growth and strong business performance will cause the stock to rebound over the medium to long term.
The key information and data provided include:
- PayPal's net revenues grew by 8% in the first half of the year, and operating income grew by 45%.
- Total Payment Volume (TPV) grew by 10% in the first six months of the year.
- The growth rate of active accounts has slowed down, but the number of payment transactions is still increasing.
- PayPal announced a partnership with KKR to sell up to $42 billion in BNPL receivables in Europe, which is seen as a positive move.
- PayPal's balance sheet carries approximately $10.6 billion of debt, but it has a significant cash position and consistent free cash flow generation.
- PayPal's enterprise value is calculated at around $64.9 billion.
- The article mentions the risks of competition, leadership changes, and a slowing rate of inflation for PayPal.
Overall, the author's analysis suggests that PayPal's business performance is strong, and the stock's underperformance presents a buying opportunity.
