Payments platform behemoth PayPal Holdings, Inc. (NASDAQ:PYPL) is going through a bit of a rough time on Wall Street right now. Over the past six months, the stock has lost more than 24%. Over the past month alone, the shares declined more than 10%.
PayPal is clearly sitting in the correction zone now and is also trading lower than its 50-day and 100-day moving averages, signaling bearish momentum is in full force.
Now, PayPal shareholders are riddled with tension as a result of new tariff proposals. Although on pause for 90 days now, they are creating an unstable environment for fintech platforms like PayPal.
The worries have hurt PYPL valuation, which now sits 1.82x its forward sales, lower than the industry average at the moment and significantly lower than its own five-year average valuation.
Does this pose a buying opportunity for PayPal now, given the uncertain conditions of the market at the moment? Or will PayPal stage a comeback soon?
What Is Happening with PayPal Now?
Last year, about 92% of consumers in the U.S. and Europe made some form of digital payments over the 12 month period and PayPal remains the largest e-commerce digital payments brand in the U.S.
While it is the frontrunner in the market segment, it’s still evolving. One of the biggest levers management has pulled to right the ship is through an overhaul of the managerial class in the past two years.
PayPal’s current (and new) CEO, Alex Chriss, has been trying to rebuild the company to become more innovation-focused and accelerate its growth. Chriss has prioritized its acquired offerings like Braintree and Venmo.
Last year major deals were struck, such as the partnership with Amazon where shoppers use the Seattle firm’s Buy with Prime feature to pay via PayPal as well as the launch of Fastlane to accelerate guest checkout and PayPal Everywhere that lets customers earn rewards.
This year, the company decided to unify its enterprise services under a single umbrella, which consolidated its brands like Braintree and Hyperwallet into a single platform called PayPal Open. Venmo remains a standalone brand, though, because of its extreme popularity.
PayPal Payment Volume Up Another 7%
PayPal has last reported its fourth quarterly and fiscal year results for and management announced a 4% rise in net revenues to $8.37 billion. This was higher than the $8.26 billion that Wall Street analysts were projecting.
Total payment volume (TPV) came in at $437.84 billion, which was 7% higher than the year-ago value. The year-over-year TPV growth rate has declined for four straight quarters. The Q4 TPV value was also marginally short of the analyst expectations of $438.2 billion.
Management reported having 434 million active accounts during the quarter, with a transaction per active account value of 60.6. Both were nominally higher than what they were a year ago.
The take rate, which basically means how much money the company is making from a transaction, also saw some weakness and dipped from 1.96% in Q4 of 2023 to 1.91% in Q4 of 2024. Te transaction take rate, meanwhile, sidled lower from 1.78% to 1.73% over the same period.
PayPal cited its merchant mix within its branded checkouts and its Braintree offering as a reason for this. On the other hand, transaction margin, which signifies the profitability of its core operations, went up by 7% year-over-year to $3.94 billion, or 47%.
Will PayPal Stock Recover or Keep Falling?
PayPal is likely to recover due to incredibly strong earnings that last came in at $1.19 per share, which was 5% higher than the prior year’s period. This was also quite a lot higher than the Wall Street analysts estimated $1.12 earnings per share. Adjusted free cash flow for the quarter jumped by 171% year-over-year to $2.10 billion.
This was a slow quarter for PayPal as its annual growth figures are better than this. Annual net revenues increased by 7% year-over-year to $31.80 billion, while its TPV posted a 10% growth to $1.68 trillion. Adjusted earnings came in at $4.65 per share, up 21% from the prior year.
A plus for long-term investors is that the Board authorized a new $15 billion stock repurchase program. This is in addition to the company’s June 2022 stock repurchase program. The leadership team now expects to make around $6 billion in repurchases this year. Analysts foresee a more than 50% upside in the stock at the moment.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.