PYPL Stock Remains an Intriguing Risk/Reward Pick Right Now. Here’s Why.


  • Investors in PayPal (PYPL) stock have seen significant losses year-to-date.
  • That’s despite the fintech company surpassing revenue and profit expectations and raising its outlook.
  • With an historically low valuation, this company’s strong macro tailwinds point to the stock being a buy here.
PYPL stock - PYPL Stock Remains an Intriguing Risk/Reward Pick Right Now. Here’s Why.

PayPal (NASDAQ:PYPL) is an appealing investment driven by strong growth and impressive profitability. PYPL stock’s new CEO, Alex Chriss, has implemented effective cost-cutting strategies, enhancing operational efficiency and potentially attracting larger investors, which could boost PayPal’s stock value.

In Q3, PayPal witnessed a 15% increase in total payment volume, reaching $387.7 billion, and an 8% year-over-year revenue growth to $7.4 billion. The company anticipates a 7%-8% sales increase this quarter, reflecting robust growth. Operating income, excluding specific items, rose 8% YoY to $1.6 billion. For the full year, PayPal projects a 10% increase in earnings per share, excluding certain items.

Here’s more on why investors may want to consider this fintech stock as a potential investment, regardless of its poor year-to-date performance, at least on paper.

Strong Catalysts Should Drive Investor Interest

PayPal’s growth underscores the increasing popularity of fintech platforms. McKinsey projects 15% annualized revenue growth for the fintech company over the next five years, driven by digital adoption and global e-commerce expansion, particularly in developing economies. Consumer trust in fintechs matches traditional banks, making PayPal a clear leader to consider in financial technology companies.

In 2021, 41% of surveyed consumers expressed their intent to increase fintech product usage, positioning PayPal as the dominant player in the U.S. fintech landscape, well-positioned for continued rapid growth.

Supported by strategic innovation and market trends, the future of the fintech giant appears promising. PYPL stock, trading under two times forward sales estimates, is approximately 10% below the sector median.

Announcement on Leadership Changes

PYPL stock announced leadership changes to boost performance and growth. Isabel Cruz will be the new Chief People Officer, effective November 27. Michelle Gill is the EVP and General Manager of the Small Business and Financial Services Group, effective immediately. Diego Scotti has taken on the role of EVP and General Manager of the Consumer Group and Global Marketing & Communications organization from December 4.

Alex Chriss, the CEO of PayPal, announced leadership changes, welcoming Isabel Cruz as Chief People Officer, Michelle Gill as EVP of Small Business and Financial Services, and Diego Scotti as Consumer Group and Global Marketing EVP. Cruz, from Walmart, brings extensive experience in talent strategies and leadership development, succeeding Kausik Rajgopal, now EVP of Strategy, Corporate Development, and Partnerships.

While these announcements may indicate to some investors that there’s something negative under the hood, I think a new era could be brewing at PayPal. Ultimately, we’ll have to see how these new executives perform from here. The market’s premature impression of these moves could indicate a contrarian buying time.

Final Thoughts

Overall, PayPal is a company that’s been hit hard by multiple angles over the past year. The fintech space is now riddled with completion, and PayPal isn’t the only dominant player in this space. For some, that could mean it’s time to innovate, and PayPal’s deep pockets are an advantage. For others, it could mean now is the time to sell. It depends on how you view this stock.

In my view, PayPal has been making the right moves to insulate its core business from the competition. We’ll see how things shape up. But for now, I remain on the bullish side of the fence.

On the date of publication, Chris MacDonald 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 Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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