summary
PayPal's valuation is very attractive, and its price-earnings ratio is extremely low compared to historical averages and revenue and earnings growth.
The company is committed to reshaping the business, improving innovation capabilities and cost efficiency.
The revenue growth potential of Venmo and its debit card wasn't fully taken into account in PayPal's valuation.
I expect PayPal to perform well in 2025.
prelude
I first reported on PayPal (NASDAQ: PYPL) at the end of December and gave it a “strong buy” rating. I thought the bullish reasons were very compelling, while the bearish reasons were gradually disintegrating. Next, I gave another “Strong Buy” rating in my earnings assessment after the fourth quarter report. Although the company lagged behind S&P in both time periods, and the stock fluctuated in a range for several months, my confidence in the value shown by the stock remained strong. I reaffirm my “Strong Buy” rating for the reasons discussed below.
It's really disheartening to keep investing in underperforming stocks while watching AI stocks rise rapidly. I understand the disappointment of many investors and bullish analysts at this company.
But I'm sure investors who are patient with PayPal will be well rewarded for years to come. Despite many signs of optimism, the business's current pricing is based on the most pessimistic expectations.
Reasons for optimism: valuations and buybacks
First, PayPal's valuation is still very...