Zacks Rank #1 (Strong Buy) stock PayPal (PYPL) is a payment platform that enables individuals and businesses to send and receive money securely over the internet. PayPal functions as a middleman, connecting users’ bank accounts or credit cards with merchants or recipients to facilitate transactions without disclosing sensitive financial details. PayPal is commonly used for e-commerce purchases, sending money to loved ones, and conducting business transactions conveniently and securely.
Venmo is a Bullish Catalyst for PayPal
Venmo is a digital wallet service owned by PayPal that has gained a strong following among the younger generation in the United States. It also functions as a social platform where users can view each other’s public transactions and add commentary or emoticons.
Venmo saw an 8% increase in total payment volume (TPV) in the first quarter of 2024, year-over-year. In 2022, Venmo handled nearly $250 billion in TPV and enjoyed a 6% increase year-over-year.
Visa, Master Drive PayPal EPS Growth
PayPal management has been focused on leveraging partnerships to increase growth. Through its partnerships with credit card company juggernauts Visa (V) and Mastercard (MA), PayPal has expanded its reach and has onboarded millions of merchants and consumers worldwide.
A deal with Alphabet’s (GOOGL) Google Pay and YouTube platforms has made payments across a wide variety of platforms seamless. Finally, a strategic partnership with Chinese e-commerce giant Alibaba (BABA) has allowed the company to tap into the massive Asia market.
PayPal is a Value Play
PYPL, once a pandemic darling, has cratered from ~$300 to under $100 today. However, unlike other pandemic darlings, PayPal has a real business. PYPL earnings are now higher than when the stock was at $300 and are expected to keep climbing into 2027.
Image Source: Zacks Investment Research
Meanwhile, PYPL’s forward price-to-sales (P/S) ratio is near 5-year lows and sits at just 1.98x. For reference, it was 13.63x at the highs. PYPL has a cheaper valuation than its sub-industry, sector, and the S&P 500 Index.
Image Source: Zacks Investment Research
PYPL Breaks Out
PYPL shares broke out of a long consolidation late last month. Further, two positives appear on the charts:
1) Golden Cross: The faster 50-day moving average has crossed above the longer-term 200-day moving average – a bullish signal.
2) Support/Resistance Flip: Old PYPL price resistance has turned into support and the stock is holding up very well in a tough tape.
Image Source: TradingView
Conclusion
Venmo growth, strong partnerships, and a cheap valuation are bullish catalysts for PayPal shares over the next 6-12 months.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpMastercard Incorporated (MA) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
