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Covid-19 was great for PayPal. Everything shut down, so people bought everything online. PayPal was growing very quickly, and its stock price was growing just as fast. PayPal was very optimistic about their future and had some really ambitious growth expectations. Then, everything opened back up, and PayPal growth slowed. They failed to meet expectations last year, and the stock fell by around 70%. With the massive decline in price, is PayPal stock now a buy?
In the second quarter of 2022, PayPal posted its first net loss since 2014. This is when things got really bad for PayPal stock. Since then, Elliot Investing Management bought $2 billion worth of PayPal stock with the goal to cut costs and increase revenue. PayPal has since returned to profitability. They have grown their revenue, and the amount of people using their digital wallet. PayPal is back on the right trajectory.
PayPal stock, at time of writing, trades 37 times their earnings per share. With that in mind, I wouldn't consider this a cheap stock. They are growing users and transaction volume which I like a lot. They are also extremely ahead of their competition in amount of places that accept them. PayPal is the most accepted digital wallet in North America. Apple Pay is second with less than half the locations.
With PayPal's current valuation, I don't consider them undervalued, but I don't consider them overvalued either. I think they are valued pretty fairly. I think their stock could be in a good position for good growth over the long-term.
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