Buy Now, Get Paid Later

                  October 10th, 2023, written by Crazy Miser

Key points:

Analysis

PayPal is a leader in digital payments with enormous brand recognition from its PayPal and Venmo platforms. We believe PayPal is a strong buy based on its diversification within the its business model for Wallet and Commerce, Network, and Payment Service Provider. Some examples of this would be Cypto, Savings/Bill Pay, Debit/Credit, "Buy Now, Pay Later", processing, payouts, and invoicing. PayPal is now creating Venmo for teens so parents no longer have to give their children cash that they could lose. Venmo has consistently climbed to 11% FXN in Total payment volume from the start of 2022 until now. We do not anticipate any slowing growth during the upcoming holiday season. Additionally, Alex Chriss is now the sitting CEO. He could bring a new business perspective into the long-term business model for PayPal such as innovations in Accounting, Payroll, and Financing for large and small business based on his past experiences as a high-level executive from Intuit.

Valuation

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PayPal is significantly undervalued compared to their historic trading valuations. It is currently trading at a P/S ratio of 2.31. We believe growth will be steady and consistent over the next few quarters and will surprise overly bearish analysts. We estimate PayPal to trade at a valuation of 7x P/S which would leave it at the price of $160-200.

Technical Analysis

Webull.com - PayPal Chart Webull Desktop 

Although it cannot ensure success, technical analysis can help us predict the direction the stock will take over the next few weeks or months. We believe the stock is currently over-sold and will likely bounce on the next catalyst. There are two gaps that haven't been filled which indicates their could be potential movement to the upside. However, the stock may have slightly more room to selling off to complete the falling wedge but, it's best to evaluate your personal long-term risk and reward opportunities.