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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.