Here’s a billion-dollar question for you. Why hasn’t PayPal (NASDAQ:PYPL) stock participated in the massive tech-stock rally of 2023 so far? A main reason is the market’s feelings of reluctance and uncertainty about PayPal during this transitional period for the company.
So, if you’re willing to take on some risk, you might have a chance to invest in PayPal at a favorable share price.
Remember, 70% of Millennials reportedly use PayPal for their money transactions. This is a top-tier fintech business that too many financial traders and commentators are underestimating, in my opinion.
Why Can’t PYPL Stock Find Its Footing?
If there’s one thing that the financial market can’t stand, it’s uncertainty. Personally, I thrive when there’s uncertainty because that’s when asset prices are undervalued. However, it’s psychologically difficult for some investors to tolerate not knowing what the future holds.
Right now, I invite you to lean into the uncertainty surrounding PayPal rather than avoid it. The company is in a critical transitional period, as Alex Chriss is set to replace current PayPal CEO Dan Schulman on Sept. 27.
Until now, Chriss has been an outsider to PayPal (i.e., he’s not an executive at the company). And, as Peerage Capital founder Miles Nadal explained, “Coming from the outside, whatever your credentials or accomplishments, you are going to face fear-based skepticism.”
Don’t get the wrong idea. PYPL stock has struggled in 2023 so far because of a number of factors, including concerns about the threat from Apple’s (NASDAQ:AAPL) Apple Pay service.
However, I suspect that fear of C-suite change is also driving the market’s trepidation about PayPal.
Finding Stability With PayPal’s Stablecoin
My point is, give the new CEO a chance before pronouncing a final judgment on PayPal’s future prospects. While you’re at it, consider that PayPal looks like a reasonably valued tech company, with its trailing 12-month price-to-earnings (P/E) ratio of 17.76x.
Chriss will inherit an exciting development at PayPal: the company’s stablecoin, known as PayPal USD. This is a cryptocurrency token which, because it’s a stablecoin, will be pegged to the U.S. dollar.
It will certainly be interesting to see what PayPal, under Chriss’s leadership, does with PayPal USD. Even if this new token isn’t used to make day-to-day purchases in the near future, it’s reasonable to expect that customers will use PayPal USD to purchase and sell other cryptocurrency tokens on PayPal’s platform.
Meanwhile, the U.S. government is still figuring out its stance, policy-wise, regarding stablecoins. It’s exciting to consider the possibility that PayPal will be on the forefront of a potential stablecoin revolution in the 2020s.
Consider the Risks and Rewards of PYPL Stock
AB Bernstein analyst Harshita Rawat recently stated that the upcoming CEO changeover “has been a key overhang over PayPal’s stock.” I fully agree, and I see an opportunity here. The market’s uncertainty about PayPal should pass after the company installs its new chief executive.
PayPal is boldly advancing what could be a game-changing stablecoin. In this light, PayPal may be severely undervalued and the market seems unduly fearful about the company. So, as long as you’re aware of the risks involved, this is a great time to give PYPL stock a try with a small share position.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
