11/22/24

As the title states, I believe PayPal Holdings, Inc. is still very undervalued. With a YTD return of 41.60%, and 5-year return of -16.46%, there is still a lot of room to recover.

PayPal Holdings, Inc. is a digital payment and transaction company that connects consumers to businesses worldwide. On top of this, they have a large presence in the P2P payment market. They are essentially a digital wallet allowing you to store all of your payment and banking information. They also provide loans to businesses and individuals through their buy now pay later program. Through their facilitation of digital payments, they have a presence in 200 countries and receive tons of traffic. In 2023, PayPal alone processed $1.53 trillion dollars in payment volume, a 12% increase YoY. This is an extremely large and well-established company with 27,200 employees, bringing in north of $30 billion in revenue.

Main Subsidiaries

PayPal's Main Subsidiaries

Venmo Highlights

Total Payment Volume - $276 billion. 13.1 % increase YoY

2023 Net income - $1.1 billion. 18.2% increase YoY

Very fast-growing platform displaying consistent user growth, TPV growth, and active account growth. Venmo is currently only in the US, which I think represents a good potential opportunity for expansion into foreign markets.

Venmo Annual Users

The market size for digital transactions is estimated to grow at a double-digit CAGR from 2024-2032. The largest growth coming from the Asia-Pacific region. PayPal is able to capitalize on this by their facilitation of cross-border transactions. Just think of the increase in digital transactions you've experienced in the past 5 years. Cash is becoming obsolete; everything is turning digital. This is great for PayPal as 90% of their revenue comes from transactions.

Digital Payment Market (Global Market Insights)

PayPal Total Payment Volume 2014-2023

Increases in digital payment transactions demonstrates a positive correlation with PayPal TPV.

PayPal Holdings, Inc. Q3 2024 Highlights

Transaction Revenue - $7,067 billion. 6% increase YoY

Total Revenue - $7,847 billion. 6% increase YoY

Total Payment Transactions - $6,631 billion. 6% increase YoY

Transactions Per Active Account - 61.4. 9% increase YoY

Total Payment Volume - $422,641 billion. 9% increase YoY

Conclusion - I believe the market for digital payments and transactions is very young, bound to experience tremendous growth in the coming years. As the dominant player in this market, PayPal Holdings, Inc. is incredibly well poised to grow. It is simple, the more transactions that take place, the more money the company makes. While this is a very competitive market, if we focus on the fundamentals of the company, all of the answers are there. They have a very good balance sheet and good management that is taking initiatives to grow and expand their brand. All of their numbers represent consistent growth YoY, and this is very likely to continue. At a current price of $86.51, I believe this company will soar easily back to the $100 range and beyond.