PayPal Holdings (NASDAQ: PYPL) stock rose 11% in March, according to S&P Global Market Intelligence. There wasn't much news, but investors may be seeing PayPal shares as a bargain after it hit its five-year low.
Is the digital payments leader falling behind? PayPal stock has fallen for years after peaking early in the pandemic. PayPal's growth is slowing, revenues are low, and it's not the imaginative disruptor it once was. progress leads digital payments and merchant solutions, but its size has hampered progress. Small fintech startups filling digital financial ecosystem gaps are challenging it.
A tremendous opportunity remains, and new CEO Alex Chriss is leading a new plan to revive growth and win market share. The companywide plan introduces new goals to all departments. It's slashing costs, reworking the C-suite, restructuring its business segments, and investing in practical enhancements like its branded checkout.
PayPal is performing well despite its issues. Payments volume rose 15% year over year in the 2023 fourth quarter, demonstrating its sustained prominence in the digital payments chain. Compared to last year, revenue rose 9% and non-GAAP EPS rose 19%.
Active accounts decreased progressively, which may be a warning indicator. Management believes these accounts aren't engaging with the platform and is focusing on productive accounts to increase income. Management predicted mid-single-digit non-GAAP EPS growth and 7% revenue growth in 2024.
PayPal stock may be undervalued. PayPal stock has dropped 74% in three years and trades at a price-to-earnings ratio of 16, near to its lows. PayPal stock isn't exactly dangerous at this pricing, but it's also not a no-brainer.
PayPal's massive business, continuous opportunities, and new growth plan suggest only upward movement. It's still changing management and implementing this new approach, so these changes may take time to pay off.
PayPal's newest report startled me with a bunch of new non-GAAP indicators and GAAP reconciliations, including transferring stock-based compensation to non-GAAP metrics in the 2024 first quarter. It's designed to enhance accountability and openness, but long, complicated financial statements scare me.
View for more updates