PayPal (PYPL) Stock Research

Overview

PayPal Holdings Inc. (PYPL) is a digital payments company that enables digital and mobile payment solutions for merchants, consumers and businesses worldwide. PayPal operates a two-sided payments platform that connects merchants and consumers, allowing users to make and receive digital payments.

Recent Stock Price Performance

PayPal's stock has been in a downtrend in 2022, falling from highs of around $310 in July 2021 to current levels of around $75, near its IPO price. This represents a decline of over 75% from all-time highs.

Potential Reasons for the Downtrend

There are several potential reasons for PayPal's prolonged downtrend:

• Shift from ecommerce boom during pandemic: PayPal benefitted from a surge in ecommerce transactions during lockdowns. Growth is slowing as consumers return to physical stores.
  • Competitive threats from new digital wallets and BNPL players.
  • Loss of key eBay partnership. eBay has transitioned to its own payments platform.
  • Rising interest rates could negatively impact consumer spending.
  • Executives have warned that 2022 will be a transition year with lower growth.
  • Lowered guidance for 2022 revenue growth to 11-13%, down from previous 15-17% range.

Valuation Metrics

• P/E Ratio: 24x (vs sector average of 48x)
  • P/S Ratio: 3.2x
  • P/B Ratio: 4.8x

Valuation appears attractive relative to historical levels and sector peers. The downtrend has compressed PayPal's valuation multiples significantly.

Final Thoughts

PayPal faces some near-term headwinds in 2022 but the long-term growth story remains intact. It retains a strong competitive position in digital payments and commerce with over 430 million active accounts globally. The recent pullback offers an attractive entry point for long-term investors. PayPal appears positioned to rebound once macroeconomic conditions improve.