A top-ranked Zacks Rank #1 (Strong Buy) stock, PayPal (PYPL) functions as a trusted payment platform, facilitating secure money transfers between individuals and businesses online without compromising sensitive financial information. This financial intermediary serves as a crucial link between users’ bank accounts or credit cards and payees, streamlining transactions across various domains such as e-commerce, personal transfers, and business dealings.
Venmo Sparks Growth for PayPal
Venmo, a popular digital wallet service under PayPal, has captured the attention of younger demographics in the US. Aside from its functional purpose, Venmo also offers a social facet where users can glimpse into public transactions and engage with peers using comments and emoticons.
In the first quarter of 2024, Venmo witnessed an 8% surge in total payment volume (TPV) compared to the previous year. Notably, in 2022 alone, Venmo processed nearly $250 billion in TPV, marking a 6% increase year-over-year.
Strategic Collaborations Boost PayPal’s Earnings
Under proactive management, PayPal has actively pursued partnerships to foster growth. Alliances with major players such as Visa (V) and Mastercard (MA) have significantly broadened PayPal’s market presence, attracting millions of merchants and consumers globally.
Moreover, seamless payment integration across various platforms has been achieved through collaborations with Alphabet’s (GOOGL) Google Pay and YouTube, enhancing accessibility. A strategic venture with Chinese e-commerce behemoth Alibaba (BABA) has facilitated penetration into the expansive Asian market.
PayPal Shows Promise as a Value Investment
Despite a significant drop from its pandemic-high of around $300 to under $100 presently, PayPal remains a sturdy contender in the market. Surprisingly, PYPL’s current earnings surpass those recorded at the peak value, hinting at a resilient business model. Projections foresee a continued uptrend in earnings through 2027.
Furthermore, PYPL’s forward price-to-sales (P/S) ratio rests near 5-year lows at 1.98x, a substantial decline from its peak of 13.63x. Notably, PayPal boasts a more attractive valuation compared to its sub-industry, sector peers, and the broader S&P 500 Index.
PYPL Shows Strong Momentum
Amid a recent breakout from a prolonged consolidation phase, PYPL shares exhibit promising trends on the charts, buoyed by:
1) Golden Cross: The favorable crossover where the faster 50-day moving average surpasses the longer-term 200-day moving average, a bullish indicator.
2) Support/Resistance Flip: Previous resistance levels for PYPL have transformed into support, showcasing the stock’s resilience in challenging market conditions.
In conclusion,
The upward trajectory of Venmo, strategic partnerships, and a compelling valuation position PayPal favorably for potential growth in the upcoming 6-12 month period.