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  • Writer's pictureJohn Tasci

Paypal Stock Analysis and Ratings

Updated: Oct 2, 2022


Pypl Paypal holdings logo

Company profile


PayPal Holdings is a global technology company providing online payments to merchants and consumers. Paypal is easy to use and creates a great platform that enables digital payments.


The platform provides a platform to make payments to consumers in more than 200 currencies and you can withdraw funds to your bank accounts in the 25 supported currencies. The company has accumulated 15.4 billion transactions in 2020 with 392 million active users in 2021. PayPal Holdings, Inc. commenced operations in 1998 at its San Jose, California headquarters, and has been in charge by the chief executive officer and president Dan Schulman, since 2015.


The primary source of revenue for Paypal is generated through fees on payments. Paypal doesn't only operate from one source of revenue, but actively acquires new companies to diversify their revenue. They provide payment solutions with PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, Paidy, and Hyperwallet. Paypal accounts for 22% of online transactions in the United States.


Paypal Holdings Inc currently trades at Nasdaq and the S&P 500. Paypal went public through an IPO in 2002. eBay purchased Paypal in 2002 valued at $1.5 billion. Then in 2015, Paypal holdings became an independent company ever since then.



Key Data


Stats Provided by Nasdaq (8/20/2022)

Exchange

NASDAQ-GS

Market Cap

​111.82 Billion

Sector

Consumer Discretionary

Price to Earnings Ratio

55.49

Industry

Business Services

Forward P/E 1 Yr.

​35.29

1 Year Target

$123.50

Earnings Per Share(EPS)

​$1.74

Share Volume

11,274,736

52 Week High/Low

​$296.7/$67.58

Average Volume

​15,189,368

Beta

1

Paypal Holdings Valuation


Valuation Statistics

Price / Book

55.56

Price / Cash Flow

18.98

Price / Sales

4.30

Price / Earnings Ratio

55.49

  • The average P/B Ratio of Nasdaq is 5.27

  • The average P/C Ratio of S&P 500 is 39.09

  • The average P/S Ratio of Nasdaq is 5.51

  • The average P/E Ratio of Nasdaq is 24.79

Tech stocks always tend to have higher than average valuations. Today's valuation of Paypal is at historic lows and an established company like this needs to have a second look. Price to Cash flow and the price-to-sales ratio is below average, which makes it undervalued in that sense. The price to book is quite high, and the P/E ratio has slightly increased due to growth slowing from the economy entering into a recession.


Paypal is undervalued and still has the potential for more growth. Elliot Management also believes so, as they increased their possession in Paypal stock. Revenue and profit continue to increase, with the number of transactions increasing, Paypal's still on the full go for online payment dominance.



Paypal Holdings Balance Sheet Overview


Balance sheet of paypal holdings

Looking at Paypal's balance sheet, one noticeable is that the company has slowed down its growth. Total assets from 2019 to 2020 jumped from $51.333 billion to $70.379 billion, a 37.1% increase. While 2020 to 2021 slowed to a 7.7% increase.


Total Liabilities also spiked from 2019 to 2020 from $34,404 to $50,076, slowing to $54,076 in 2021.


Overall, from the balance sheet, we can see that Paypal is restructuring and slowing down growth. 2019 to 2020 will be an outlier due to an increase in online transactions from the pandemic and increased spending due to a record low-interest rates to stimulate the economy.


Paypal holdings balance sheet shows no signs of worry and continues to increase every year.



Paypal Holdings Income Statement Overview

Income Statement of Paypal Holdings

Paypal holdings have kept consistent revenue growth and have grown 18.26% in 2021. PYPL's revenue growth is slowing in 2022, with 7.36% and 9,11% growth in the first and second quarters. eBay has been rapidly moving payments away from its platform and more consumers worldwide are returning to in-person shopping. Paypal has lost its sheen from the pandemic era.


Profits have stayed stale from 2021 to 2022 with a decrease of 0.78%, although consistently seeing double digits in the past and a whopping 70.88% in 2021! Profits have slowed in 2022 and Paypal holdings held a loss in quarter two.


Profit margins stay unaffected which is a good sign as revenue grows so will net income.

Pypl stock price has priced in these events and has stayed in floor value. Pypl stock should increase in the near future when interest rate hikes stop and the United States exits from the recession.



PayPal (PYPL) technical analysis


Technical analysis report brought to you with trading view.


1 Month Summary of Paypal holdings (data from 8/21/2022)


Oscillators & Moving Averages Signal



Outline of Oscilator Results


Outline of Moving Averages Results





Everything seems to be against PayPal's stock price dropping. Technical analysis gives Paypal holdings a sell rating.


Technical analysis combined with fundamental analysis helps you choose the best stock for the long term, but technical analysis shouldn't be your primary research. It's more so used for short-term trades or timing purchases.


A good company will continue to rise and get past hard times, growth stocks like Paypal get crushed in market downturns and flourish during uprises.



Paypal Stock Price Forecast


Price target, rating, and forecast data are provided by Finhub. The data is sourced from Wall Street analysts and other sell-side and buy-side analysts.


Analyst price targets were provided on 8/21/2022 with a current price of $96.56.

Target

Low

Average

Median

High

Price

$87.87

$123.40

$120.36

$267.75

Change

-9.00%

+27.80%

+24.65%

+177.29%

According to 57 stock analysts, the average 12-month stock price forecast for PYPL stock is $123.4, which predicts an increase of 27.8%. The lowest target is $87.87 and the highest is $267.75. Analyst consensus for PYPL stock is a buy!


Analyst Ratings


Financial Forecasts



Revenue Forecast



Revenue Growth


EPS Forecast



EPS Growth



Analyst forecasts are in favor of Paypal stock price to increase with an average price target of $123.40. With the S&P 500 returning an average of 10% yearly, PYPL expected target provides a 27.80% increase in the next 12 months from the average forecast. This should be eye-opening for investors and build equity in PYPL stock.


Paypal Stock Guidance


For full-year 2022, the company now expects adjusted EPS of $3.87-$3.97, topping the consensus of $3.85, and increasing from its prior range of $3.81-$3.93. Revenue is expected to reach $27.85B vs. a consensus of $28.18B.


PayPal expects 10M net new actives in FY2022.


Earnings per share are expected to increase while revenue is expected to be less than expected which is completely normal during times of recession. An increase in guidance in Q2 helped the stock price of PYPL increase.



Paypal Stock News and Macroeconomics Affecting the Company


There isn't any current news for Paypal, but to stay updated check out Paypal News Room.


Inflation may not improve the company's financial services. The U.S. annual inflation rate was 8.9% in June. The most recent inflation data indicates inflation has risen, and it will likely not alter Federal Reserve policies in the current economic environment. This year the Fed grew its borrowing costs by threefold compared to last year's. 25 basis points were gained by the end of the month. Then 50 base points were added at the start of May with a surprise 75bps increase in mid-July.


But there is hope for slowing inflation. The annual inflation rate for the United States is 8.5% for the 12 months ended July 2022 after rising 9.1% previously. This will cause a slowing rise in interest which will be beneficial for growth stocks.


Losing eBay as a partner hurt Paypal because back then eBay sellers only had the option of accepting payments from Paypal, and they took advantage of this by charging fees for every sale. So, losing that will slow revenue growth.


Dividends


PYPL has currently no dividends. It also doesn't look like they're seeking to pay dividends either. This is not the best stock for income-driven investors because a dividend yield of 0.00% will result in $0.00 in your pocket!!! It's also rare for growth stocks to introduce dividends even if they're huge companies like Amazon and Google. Don't expect Paypal to pay dividends in the upcoming years.


My Rating on Paypal Stock

I personally own shares of Paypal Holdings Inc and have it on my watch list to build more equity. Paypal is the go-to technology platform that allows users to send and receive payments in an instant. Upcoming earnings will give us more insight into how Paypal is performing. The stock market is still in a bear market, creating a great opportunity to build more equity, and the price target will continue to increase.


I have Paypal holdings as a buy and a 12-month forecast of $150. That's around a 50% gain from the current value. This high forecast is due to the economy getting better and growth stocks rally starting. Long term 5 years, Paypal will perform great and return back to all-time highs.


This is not financial advice, this is Tasci advice. Research more about Paypal and see if it fits your views as an investor. You can purchase Paypal stock on Robinhood and receive free stock when you open an account.





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