Three Reasons to Consider Buying or Selling PayPal Stock in 2024

Wednesday, 27 March 2024, 08:20
PayPal (NASDAQ: PYPL) faces both bullish and bearish arguments for investors in 2024. Despite revenue growth slowing down and challenges in user acquisition, the stock remains a value play with improving margins. However, declining active accounts and take rates raise concerns about its competitive position and could impact future performance. Investors should carefully weigh these factors when deciding to buy, sell, or hold PayPal's stock.
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Three Reasons to Consider Buying or Selling PayPal Stock in 2024

The Digital Payments Provider Conundrum

The ongoing debate on PayPal (NASDAQ: PYPL) as an investment remains divisive despite its historical performance amidst a changing fintech landscape.

Bulls' Case:

  • Stabilizing Sales Growth: Revenue increased by 8% in 2023 due to Braintree and Venmo.
  • Improving Margins: Operating margin expanded 110 basis points to 22.4% in 2023.
  • Value Play: Trading at 13 times forward earnings, seen as undervalued by some insiders.

Bears' Case:

  1. Bleeding Active Accounts: 2% decline in active accounts in 2023, imperiling growth prospects.
  2. Declining Take Rates: Annual take rate fell from 2.89% in 2015 to 1.76% in 2023, signaling pricing challenges.
  3. Lacks Competitive Moat: Struggles to differentiate from rivals amidst intensifying competition.

CEO Alex Chriss foresees 2024 as a pivotal year for PayPal's transformation, emphasizing the need for sustained growth and innovation amid industry challenges. Investors must assess PayPal's future potential against current headwinds to make informed decisions.

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