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Summary
- PayPal’s fundamentals remain strong despite competition from Apple Pay, Google Pay, and Stripe, as it continues to grow in transaction volume, customer numbers, and profits.
- The company’s dominant market share is due to its long-standing trust, ease of use, and compatibility with all devices and operating platforms.
- With a potential upside of 18.63% IRR over the next 10 years, PayPal is considered a “Strong Buy” despite temporary headwinds and competitive threats.
Investment Thesis
Let’s face it: it has been a difficult year for PayPal (NASDAQ:PYPL), to say the least. Despite a strong start to the year, it is currently down 11.47% YTD, compared to the S&P 500 which is up 10.73%.
Therefore, we will address the reasons why investors may be too bearish on PayPal, overestimating competitive threats and overstating temporary headwinds while the company is fully focused on returning capital to shareholders and maximizing PayPal’s efficiency. We will quantify these risks, outline what an extreme downside scenario might look like and why we think the stock could generate investors more than an annual 18% IRR over the next 10 years.
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