Here’s Why PYPL Stock Sucks

PayPal stock $pypl is trading down 20% since the last time we checked in - 18 months ago - at which time we said pypl stock wouldn't be interesting at any price. That's only because we invest in two areas - disruptive growth and dividend growth - and PayPal's days of disruption appear over. The problem PayPal has is trying to resurrect growth as management talks about focusing on current accounts. That land-and-expand strategy comes with lowering take rates, so even through transaction volumes are increasing, revenue growth isn't keeping up at the same pace. PayPal investors who look back at the lofty share prices of old need to remember those were justified by management's claim of hitting $50 billion in revenues by next year. That doesn't appear to be happening as 2023 expects to see around $29 billion. PayPal's problem is that the market is now seeing them as more of a value stock than a growth stock.

RESEARCH PIECES USED IN THIS VIDEO:
1. PayPal Stock is Falling: Buy or Sell?
2. Checking in With PayPal, Adyen, & Block
3. PayPal Stock Plummets: Is it a Good Buy?
4. Checking in With Payment Stocks – PayPal, Adyen, & Block
5. Remitly Stock: A Challenger to Western Union?

CHAPTERS:
00:16 PayPal's market leadership
01:00 Where's the growth?
02:54 PayPal's account growth stalls
05:37 Payment volume vs take rate
07:18 Why is PYPL buying back shares?
09:59 Why PayPal stock sucks
11:18 Expected sales growth
12:41 Key metrics for PayPal investors

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[boratsmagadijev]

Bag holder here, got hooked on that 50B$ 2025 story... Hope new CEO makes some smart moves 😭
My plan is to hold the bag until 2026.

[facadcofac]

I used to be a merchant using PayPal. After they would'ent return fees in a refund. I found another preccessor that would and enabled PayPal as secondary and cut their processing by 90%. Stop screwing your customer, PayPal.

[factotums]

PayPal seems like one of the first 'legacy' companies of the digital era, in that I mean I agree that they seem to be transitioning into a value company. You can't seem to throw a rock without hitting a PayPal acquisition, at the same time I don't know if it has done any good. I mean you can send money to people with the standard PayPal app, do they really need Venmo? So I don't know. This is a weird time for Fintech. You have brand new stadiums being financed by some code a 17 year old wrote when he was bored. Still the PayPal brand is sort of comforting when dealing with things like, I dunno, putting your credit card number onto a Tajikistan startup company. Personally I treat Fintech like Biotech, I usually just buy a sector ETF because it all seems crazy at the moment.

[thepixalking]

I own PayPal, but I like listening to contrarians to check my decision bias.
You make good points. Now I will re-evaluate.
I do think the new CEO could have a decisively positive effect on the company.

[brianmalone]

I really appreciate the straightforward way you present the information. It can be easy to get lost in all the financial metrics. I learned something new from your clear explanation of take rate, total payment volume and its relation to revenue. Now I have something useful to keep in mind for future earning reports. Thanks!

[nicolasrodriguez]

As a merchant using PayPal…they charges the highest fees. But, in my numbers PayPal conversion rates are higher. So, i sell more. Is just me?😂

[davidcunningham]

so many pundits are trying to push this stock. thanks for debunking it. i have never had any need to use it.

[jaykrizzle]

As a merchant and a customer, paypal is always the last resort. Awful company

[fendermon]

Major credit cards reimburse for fraud so I don't see the need for a third party in the middle, unless it is neatly tied to hardware like Apple Pay. If I spent ten minutes trying to resolve a problem with Paypall..it's ten minutes too many.

[azulsimmons]

Paypal is a hyper-competitive market segment against a lot of big players. I'm not sure how they win that. They were a first mover in payments when Paypal was big, but now they're another player in a crowded field. I used to use Paypal on Ebay, but since Ebay now offers other options not sure what accretive value they offer. They don't seem worth the investment.

[filipepina]

Facebook it was at €100 a year ago, the market also saw many problems despite sales growth being constant.

[kahvac]

I think PayPal lost a lot of users when they said they would fine people for misinformation.

[AlBergstein]

I also didn't see any mention in your analysis of the growth of Apple Pay and Google Pay in all this I know myself I'm using Apple Pay more than PayPal at this point and that's been a shift over the last year. The convenience of Apple Pay and Google Pay seems to be headwind against PayPal being able to expand the business rather than just milk more money out of the existing customer base, I have recently, in the last year I've been long with PayPal, but I'm certainly questioning the decision for how much longer I'll stay in

[ASenseofCapital]

What for me the most akward about Paypal is actually not the business itself but the perspective of the investors: Many of them rate it as a bargain just because It's far below the IPO price and they assume it might be the next turnaround story like Meta. In my opinion, the reality couldn't be more away...

[mrmurky]

I keep telling ppl PayPal is not a growing company and it’s why the stock is like this but they won’t listen.

[RaiiNdroPz]

Great video! I feel like all the arguments you made are of management nature or whatever you want to call it. You mentioned it: rev growth, tpv growth but take rate going down. To me that sounds like theres upside in terms of profitability. Since active consumer count and also in my opinion stagnating payment volume is priced in quite accurate, i bought some shares today. :)
Also Alex chriss might bring some fresh winds into the company and make the market forget the past non visionary management. We'll see!

[brianwest]

this is an example of why i like dividends and not buybacks. Paypal have wasted 30 billion on buybacks

[jasonjunior]

So they just need to lower costs? That’s an easy fix. Thank you for the bearish input . New CEO is fixated on just that, and more innovation . Let’s see how earnings go

[steenpedersen]

I missed a conclusion on this one - is Palpal actually cheap at this point?