PayPal Stock: A Disconnect Between Value and Worth

PayPal stock has experienced a significant decline of over 80% from its all-time high prices. However, despite this decline, the fundamentals of the business remain strong and it is still well-positioned in the market. Analyst ratings suggest that the stock may be undervalued, and with management increasing share repurchases, there is potential for a massive rally in the stock price.

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Key Points

1. Despite a decline of over 80% from its all-time high, PayPal’s fundamentals remain strong, and its market positioning offers a disconnect between value and worth.
2. PayPal’s level of trust in the online payment space is hard for competitors to achieve, giving it an advantage over alternatives like Apple Pay.
3. Analyst ratings suggest an undervaluation of PayPal stock, with a potential 43% upside and a cheaper price compared to other significant names in the industry. Management’s share repurchase program also indicates confidence in the company’s future performance.

PayPal’s stock has declined by over 80% from its all-time high prices, but the business fundamentals remain strong. The company’s market positioning offers a disconnect between value and worth, potentially hinting at undervaluation. Analyst ratings suggest a 43% upside scenario from current prices, with a target price of $160 per share.

PayPal has achieved a level of trust that is difficult for competitors to match in the online payment space. Users still prefer PayPal over other options like Apple Pay, as PayPal goes through a rigorous process to ensure the safety of its users and transactions.

Despite the decline in stock price, PayPal continues to experience growth, with a 12% increase in total payment volumes in the first quarter of 2023. The company has 433 million active accounts and owns around 50.3% of the global market share in personal payment processing.

Comparing valuation multiples, PayPal’s price-to-earnings ratio is the lowest since its IPO, making it a cheaper alternative compared to competitors like Visa and Mastercard. Management has been increasing share repurchase rates, returning billions of dollars to investors and hinting at the potential for a breakout.

Investors who were hesitant to buy during the stock’s decline last year may now have an opportunity to acquire shares at the same price as management. With historical correlation between PayPal and the Invesco QQQ ETF, the stock may be due for a rally to return to its normal performance.

The most heavily traded zones for PayPal stock lie between $170 and $200 per share, which could be a sensible target once the company experiences a cyclical bull run and analysts adjust their sentiment and targets accordingly.

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