Payments platform PayPal (NASDAQ:PYPL) has been one of Wall Street’s biggest winners for years. Over the past five years, PYPL stock is up nearly 800%. Why? Because PayPal has emerged as a winner in the Digital Revolution, wherein consumers are shifting all their activity into the digital world.
That’s the good news. Here’s the better news: The Digital Revolution is only going to accelerate over the next decade.
Consumers are only going to shop online more. They’re only going to use digital wallets more. They’re only going to engage and play more in the digital world. As they do all of that stuff, consumers will increasingly find themselves using PayPal’s suite of digital payment services in their everyday lives.
And, as that happens, PayPal’s revenue and profit growth rates will remain robust — which will lay the foundation for this big rally in PYPL stock to persist for a lot longer.
Here’s a deeper look.
The Digital Revolution
Welcome to the Digital Revolution.
Yes, this revolution is not new. But it’s getting bigger and bigger, and faster and faster, thanks to the Covid-19 pandemic — and eventually and inevitably, we will be living in a digi-everything world.
Here’s the story.
The internet makes everything hyper-convenient. Super fast. Super easy. But, for a long time, the internet also had large shortcomings versus physical experiences, such as human interaction, the ability to see-and-touch products, etc.
Technological improvements over the past few years have rapidly fixed those shortcomings. For example, video calls are becoming hyper-interactive and very productive, thereby becoming a sufficient quasi-replacement for in-person meetings and checking up on Grandma. Also, augmented reality features on e-commerce sites are allowing consumers to visualize and closely see products that consumers were only willing to purchase in-store before, such as cars, furniture and homes. Not to mention, we can now gamble online now, with real money.
The result? Everyone is virtualizing all of their activities. Covid-19 provided an impetus to accelerate this virtualization.
PayPal is at the epicenter of the Digital Revolution. Thus, as the Digital Revolution only accelerates over the next decade, PYPL stock will head higher.
PayPal’s Relentless Innovation
Beyond just being immersed in the Digital Revolution, PayPal is innovating relentlessly to remain the most important and widely used digital payments platform in the world.
PayPal has jumped into the mobile payments space with Venmo, which is now the most widely used mobile peer-to-peer payments app out there. The company has added a debit card to its Venmo app, increasing the company’s exposure to the physical payments space. PayPal has also delved into cryptocurrencies, and now accepts cryptos on its payment platform. What’s more, the payments company is also jumping into more direct shopping and investing.
Basically, it’s doing it all.
PayPal is turning into an all-in-one digital wallet for consumers in the digi-everything economy.
That’s why PayPal usage will only go up over the next several years. By a lot. So will revenues., profits and the PYPL stock price.
Upside for PayPal Stock
When you look out long-term, it becomes obvious that PYPL stock has healthy upside potential.
Digital payment volume globally will grow at a 10%-plus rate for the next five to ten years as consumers shop, eat, play, and work more online. PayPal will leverage its widening value prop to increase share in that booming market, paving a path for 10% to 15% revenue growth. Profit margins will increase with scale, because the company operates on a highly scalable business model with a lot of fixed costs.
Net net, PayPal projects as a 15%-plus profit grower for the next five to ten years. Indeed, my modeling says that PayPal’s earnings per share will round out at around $25 by 2030.
Based on a 25X earnings multiple, that implies a long-term price target for PYPL stock of $625. That’s more than double the current price tag. Thus, I think you have to stick with PYPL stock here and now.
Bottom Line on PYPL Stock
The Digital Revolution is just getting started. So is PayPal. Over the next decade, consumers will increasingly virtualize more and more of their activities, and PayPal usage will soar as the company turns into a ubiquitous digital wallet.
Of course, as all that happens, PYPL stock will keep doing what it has been doing for years: Rally, rally, and rally.
P.S. Have you noticed the trend lately? The stock-picking trend has made a comeback in 2021… But with all these stocks going parabolic only to come crashing down, it’s impossible to tell up from down. It may seem like the smartest thing to do is sit on the sidelines… it’s not.
There are still stocks out there with hypergrowth potential… Stocks that have actual fundamentals which can push them higher in the near and long-term. One such stock could very well be “the next Amazon.” And I’m going to reveal it on Feb. 23!
As we near that date, I’ll give you more info on this multi-trillion-dollar shift through my Hypergrowth Investing newsletter. Once you sign up for Hypergrowth Investing, you’ll also be signed up for my upcoming event.
Hope to see you there!
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s how his Daily 10X Report has averaged up to a ridiculous 100% return across all recommendations since launching last May. Click here to see how he does it.