PayPal Holdings Inc. (PYPL:NSD) has experienced a significant decline in its stock value, plummeting by approximately 80% from its 2021 peak of around $310. PYPL stock finds itself at the same level it traded at in 2017. This dramatic downturn has raised concerns among investors. However, amid increased competition and rising interest rates, is there a glimmer of hope for PayPal’s recovery? This article highlights the factors affecting stock performance, fiscal outlook, and what analysts are saying about PayPal stock forecast.
Competition Impacting PayPal:
The foremost factor exerting downward pressure on PayPal’s stock is the intensifying competition within the fintech sector. Over the past decade, the fintech industry has seen exponential growth, attracting substantial venture capital and private equity investments. This surge has given rise to a multitude of startups eager to carve out their share of the market, even if indirectly competing with PayPal.
Challenges to PayPal’s Dominance:
While PayPal once enjoyed an uncontested dominance in online payments, Competitors have emerged across various segments, such as mobile payments, digital wallets, cryptocurrencies, and online banking. This fierce competition raises questions about PayPal’s ability to maintain its top position.
For example, when comparing PayPal’s transaction fees to industry rivals, it becomes apparent that PayPal is the costliest option, charging a transaction fee of 2.99% plus $0.49 for each card transaction, while competitors like Block (SQ:NYE) charge less at 2.6% plus $0.10 per card transaction.
Wise vs. PayPal:
In international transfers, Wise (WISE:LSE) outpaces PayPal by offering faster delivery times and better exchange rates. Sending £1,000 via Wise yields 1,156.56 Euros within two hours. With PayPal, it takes up to four days, yielding 1,107.66 Euros due to higher fees. PayPal, despite its long-standing reputation, faces challenges in matching the cost-effectiveness and efficiency, which might outshine PayPal stock forecast.
PayPal’s Fiscal Outlook:
Despite these competitive challenges, PayPal appears poised to achieve record earnings in Fiscal 2023. Factors contributing to this positive outlook include higher revenues driven by inflation, prudent cost management, and significant stock buybacks.
Revenue Growth:
Recent Q2 results show an 8% revenue growth on a currency-neutral basis, reaching approximately $7.3 billion. This growth is driven by an 11% increase in Total Payment Volumes (TPV). However, it’s worth noting that this growth may appear less impressive when adjusted for the significant inflation of the past year.
PayPal’s Disciplined Management:
In terms of payment volumes, Wise achieved a robust 37% growth during Fiscal 2023, while Stripe, though private, is estimated to grow by roughly 22% this year to $1 trillion. Despite this, PayPal’s management has demonstrated discipline in controlling expenses, resulting in a 24% growth in adjusted EPS to $1.16.
Based on its performance in the first two quarters and current business momentum, PayPal’s management anticipates a 20% rise in EPS, reaching a new record of $4.95 for the year. This indicates that, despite ongoing pressures and concerns regarding competition, PayPal’s profitability remains robust.
Paypal Stock Forecast:
According to PayPal stock forecast by 26 analysts, an average target price is USD 86.74 within the next 12 months, reflecting a positive upside of 34.60%. For investors seeking guidance, analyst Moshe Katri from Wedbush stands out with an impressive average return of 22.80% per rating and a 60% success rate.
Analysts Consensus:
The average analyst rating for PayPal is categorized as “Strong Buy.” However, it’s worth noting that Stock Target Advisor’s own analysis presents a “Neutral” rating. This assessment is based on a combination of 5 positive signals and 6 negative signals.
Performance Metrics:
At the most recent closing, the stock was valued at USD 62.84. Over the past week, it experienced a marginal increase of +0.06%, while over the past month, it witnessed a significant gain of +2.11%. However, over the course of the last year, the stock price has seen a substantial decline of -35.65%.
These metrics provide valuable insights into the market’s perception and recent performance of PayPal Holdings Inc.’s stock.
Conclusion:
While PayPal confronts mounting competition and pricing challenges, its disciplined cost management and stock buybacks have positioned it for record earnings in Fiscal 2023. The key to its long-term success in this evolving market lies in its ability to adapt and innovate. Currently trading at just 12.7 times management’s projected EPS for the year, PayPal appears to offer an enticing risk-reward ratio with a reasonable margin of safety.
