Its price-to-earnings (P/E) ratio is more than 35, but that ratio is just 15 based on projected earnings for this year. The stock trades at a cheap valuation relative to recent history. PayPal will likely face headwinds in the near term if discretionary spending continues to slow. Chief Financial Officer Gabrielle Rabinovitch told investors during the fourth-quarter earnings call that PayPal's "revenue growth is highly correlated to discretionary e-commerce spending in our core markets." That's because of its focus on online transactions, which are primarily on things that are nice to have but not essential. Braintree was largely responsible for PayPal's 5% year-over-year transaction growth last year.Ī slowdown in consumer discretionary spending due to inflationary pressures has hurt PayPal.
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PayPal also saw its TPA rise 13% in the quarter, a sign that its plan to increase user activity is working. One growth driver was Braintree, a full-stack payment processing platform for large businesses. In the fourth quarter, revenue and earnings growth over the prior year were 7% and 19%, respectively. The investor wanted PayPal to focus on cutting costs and pursuing high-conviction, high-margin opportunities. One thing that altered the trajectory for PayPal was a $2 billion stake by the activist investor Elliot Investment Management last August. PayPal closed out last year with revenue growth of 8%, but its net income fell by 42%. PYPL Total Return Level data by YCharts Moving toward efficiency However, if you held the stock through today, that investment would now be worth just $680. At one point, that investment would have reached $2,852 midway through 2021. Investors who put $1,000 into PayPal at the start of 2020 have seen volatile swings in their investment. If you bought $1,000 in PayPal stock at the beginning of 2020, you'd have this much
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