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PayPal's market share has been steadily increasing, with a significant boost in the past year. This growth can be attributed to the company's strategic acquisitions, including the purchase of iZettle, a Swedish mobile payments company.
In 2020, PayPal's total payment volume (TPV) reached $936 billion, a 20% increase from the previous year. This surge in TPV is a clear indication of the company's expanding market presence.
PayPal's user base has also seen a significant expansion, with a 20% increase in active accounts in the past year. This growth in user base is a key driver of the company's increasing market share.
As a result of these developments, investors are eagerly watching to see how PayPal's stock will perform.
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PayPal Stock Analysis
PayPal's earnings growth rate has accelerated over the last three quarters, reaching 37% last quarter. This growth is impressive, especially considering its revenue growth has held steady at the high single-digit level.
The stock's price performance has been strong, with an RS rating that shows PayPal topping 73% of all stocks over the past year. History suggests that stocks with an RS rating over 80 often go on to make big gains.
PayPal's new CEO and strategic direction have contributed to its recent success, with the stock up 44% this year. However, it's worth noting that it's still underperforming the S&P 500's 246% gain since its initial public offering in 2015.
The average analyst target price for PYPL stock is $85.58, representing an implied upside of roughly 10% to current levels. Most analysts think the stock has more room to run.
However, not everyone is optimistic, with Morgan Stanley having an Equal Weight rating on PYPL with a $71 price target. They express concerns over PayPal's strategic direction, including slow progress in improving Branded Checkout and doubts about Venmo's monetization potential.
Despite these concerns, financial services firm Susquehanna Financial Group recently upgraded PayPal to Positive, citing constructive conversations with the company and a focus on profitable growth. They have a $71 price target, which is 11% above the current stock price.
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Investment Decision
PayPal stock has been on a roll, closing higher five of the last six trading sessions and up 19% since its July low.
The stock has a 70.66 buy point and has been consolidating, with a low of 57.03 on July 1.
Wall Street is overwhelmingly bullish on PayPal, with the consensus recommendation being Buy.
Most analysts expect the stock to continue rising, with an average target price of $85.58 representing an implied upside of roughly 10% to current levels.
However, not everyone is convinced, with Morgan Stanley having an Equal Weight rating on the stock and expressing concerns over PayPal's strategic direction.
PayPal's massive online acceptance lead and industry-low attrition can support growth, but there are doubts about the company's ability to execute key strategies.
Despite these concerns, the stock remains a top performer, earning the No. 9 rank among its peers in the Finance-Card/Payment Processing industry group.
PayPal's Relative Strength Rating is 9, indicating strong price action over the last 52 weeks.
The stock has a long way to go before breaking out, but it's worth keeping an eye on its progress, especially with the average analyst target price indicating significant upside potential.
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Market Performance
PayPal stock has closed higher five of the last six trading sessions, which is a strong indication of its upward momentum.
The stock is currently working on a consolidation with a 70.66 buy point, a significant level to watch for potential breakout.
PayPal closed at 67.94 Thursday, up 2.7% for the day and 19% higher since its low on July 1, showing its impressive recovery.
It's worth noting that PayPal earns the No. 9 rank among its peers in the Finance-Card/Payment Processing industry group, which is a testament to its performance.
The Relative Strength Rating, a proprietary measure by IBD, gives PayPal a score that compares its price action to other publicly traded companies, and it's a key indicator of market leadership.
PayPal's Relative Strength Rating is particularly noteworthy, as it identifies market leadership by using a 1 (worst) to 99 (best) score, and it's currently performing well within its industry group.
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Company Overview
PayPal has been on a roll this year, with its earnings growth rate accelerating to 37% last quarter and revenue growth holding steady at 8%. The stock is up 44% this year, a market-beating performance.
PayPal's active account growth is still a bit weak, but the company is focused on increasing engagement with current users, which is going well, with transactions per active account up 9% year over year in the third quarter.
The stock has an average analyst target price of $76.92, representing an upside of roughly 20% to current levels. The consensus recommendation is Buy, with a recent upgrade to Positive from Neutral by Susquehanna Financial Group.
PayPal is transitioning from a payments platform to a commerce platform, creating more effective solutions to client challenges and partnering with other global commerce giants to expand its brand and reach.
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Frequently Asked Questions
Will PayPal bounce back?
PayPal is expected to bounce back with analysts predicting a 16% rise in adjusted EPS in 2024 and a 9% increase in 2025. Its current valuation of 17 times forward earnings suggests it's reasonably valued, making it a potential investment opportunity.
Sources
- https://finviz.com/quote.ashx
- https://www.investors.com/news/ibd-rating-upgrades-paypal-holdings-flashes-improved-relative-price-strength/
- https://www.fool.com/investing/2024/12/28/where-will-paypal-stock-be-in-1-year/
- https://www.kiplinger.com/investing/stocks/is-paypal-pypl-stock-still-a-buy-after-a-revenue-miss
- https://www.kiplinger.com/investing/stocks/paypal-pypl-turns-in-strong-q2-earnings-hikes-stock-buybacks
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