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PayPal Holdings, Inc. (PYPL)
:PYPL
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PayPal Holdings
(NASDAQ:PYPL)73Outperform
Positive Factors
Growth Initiatives
The company showcased numerous self-help initiatives aimed at improving customer experience, deepening consumer wallet share penetration, and streamlining operations.
Revenue Growth
Limited discussion of PayPal's advertising opportunity could drive 5-10% potential upside to revenue over the medium-term.
Negative Factors
Competitive Environment
The competitive environment is not standing still with new checkout experiences emerging and changes in the structure of eCommerce.
PayPal Holdings (PYPL) vs. S&P 500 (SPY)
Market Cap
$66.75B
Dividend YieldN/A
Average Volume (3M)13.55M
Price to Earnings (P/E)16.9
Beta (1Y)1.45
Revenue Growth7.10%
EPS Growth4.45%
CountryUS
Employees24,400
SectorFinancial
Sector Strength93
IndustryCredit Finance
Share Statistics
EPS (TTM)4.00
Shares Outstanding989,242,430
10 Day Avg. Volume14,340,013
30 Day Avg. Volume13,553,494
Financial Highlights & Ratios
PEG Ratio3.79
Price to Book (P/B)N/A
Price to Sales (P/S)2.17
Price to Cash Flow (P/CF)7.20
P/FCF Ratio7.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$95.16Price Target Upside41.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering31
PayPal Holdings Business Overview & Revenue Model
Company DescriptionPayPal Holdings, Inc. is a leading technology platform company that facilitates digital and mobile payments on behalf of consumers and merchants worldwide. Operating in the financial technology sector, PayPal provides a wide range of services, including online money transfers, digital wallet services, and payment processing solutions. Its core products allow individuals and businesses to make and receive payments through various channels, including online, mobile, and in-person transactions. With a global presence, PayPal serves millions of active account holders, offering them a convenient, secure, and efficient payment experience.
How the Company Makes MoneyPayPal makes money primarily through transaction fees, which are charged to merchants when consumers use PayPal to make purchases. These fees vary based on the transaction's size and location, as well as the payment method used. In addition to transaction fees, PayPal also earns revenue from interest and fees on its credit products, such as PayPal Credit and Working Capital loans, which are offered to both consumers and merchants. Furthermore, the company generates income from value-added services, including subscription fees, referral agreements, and partnerships with financial institutions that expand its service offerings. Strategic acquisitions and partnerships, such as those with Venmo and Braintree, also contribute to PayPal's revenue by broadening its market reach and enhancing its product capabilities.
PayPal Holdings Financial Statement Overview
Summary
PayPal Holdings shows a well-balanced financial performance with strong revenue growth and solid cash flow generation. While profitability margins remain robust, there is a slight decline in net income and return on equity. The company maintains a prudent leverage level, supporting its stability. Overall, PayPal is in a strong financial position, with excellent cash flow management and consistent revenue growth.Income Statement
PayPal has demonstrated steady revenue growth, with a 6.8% increase from 2023 to 2024. The company maintains a solid gross profit margin of 46.1% and an EBIT margin of 16.7% for 2024. However, the net profit margin slightly decreased to 13.0%, indicating some pressure on net profitability. Overall, PayPal shows strong revenue growth and solid operating margins.82
Very Positive
Balance Sheet
PayPal's balance sheet reflects a moderate debt-to-equity ratio of 0.48, indicating prudent leverage usage. The equity ratio stands at 25.0%, showing a stable capital structure. ROE decreased slightly to 20.3%, reflecting stable profit generation from equity. Overall, the balance sheet remains strong, though there is a slight decline in equity returns.75
Positive
Cash Flow
The company achieved impressive free cash flow growth of 60.3% from 2023 to 2024, highlighting strong cash generation capabilities. The operating cash flow to net income ratio is 1.80, indicating efficient cash conversion from earnings. Additionally, the free cash flow to net income ratio of 1.63 further underscores strong cash flow performance. PayPal exhibits robust cash flow metrics, supporting its financial flexibility.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 31.80B | 29.77B | 27.52B | 25.37B | 21.45B | Gross Profit |
| 14.66B | 13.70B | 13.77B | 14.00B | 11.78B | EBIT |
| 5.33B | 5.03B | 3.84B | 4.26B | 3.29B | EBITDA |
| 6.74B | 6.83B | 4.99B | 5.60B | 6.46B | Net Income Common Stockholders |
| 4.15B | 4.25B | 2.42B | 4.17B | 4.20B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 10.82B | 14.06B | 10.85B | 9.50B | 13.08B | Total Assets |
| 81.61B | 82.17B | 78.72B | 75.80B | 70.38B | Total Debt |
| 9.88B | 9.68B | 10.42B | 9.05B | 8.94B | Net Debt |
| 3.32B | 595.00M | 2.64B | 3.85B | 4.14B | Total Liabilities |
| 61.19B | 61.12B | 58.44B | 54.08B | 50.32B | Stockholders Equity |
| 20.42B | 21.05B | 20.27B | 21.73B | 20.02B |
| Cash Flow | Free Cash Flow | |||
| 6.77B | 4.22B | 5.11B | 4.89B | 5.35B | Operating Cash Flow |
| 7.45B | 4.84B | 5.81B | 5.80B | 6.22B | Investing Cash Flow |
| 1.59B | 752.00M | -3.42B | -5.15B | -16.55B | Financing Cash Flow |
| -8.28B | -2.99B | -1.20B | -557.00M | 12.45B |
PayPal Holdings Technical Analysis
Negative
67.48
Price Trends
82.91
Negative
83.54
Negative
74.79
Negative
Market Momentum
-3.99
Positive
22.44
Positive
8.98
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PYPL, the sentiment is Negative. The current price of 67.48 is below the 20-day moving average (MA) of 75.40, below the 50-day MA of 82.91, and below the 200-day MA of 74.79, indicating a bearish trend. The MACD of -3.99 indicates Positive momentum. The RSI at 22.44 is Positive, neither overbought nor oversold. The STOCH value of 8.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PYPL.
PayPal Holdings Risk Analysis
PayPal Holdings disclosed 28 risk factors in its most recent earnings report. PayPal Holdings reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
PayPal Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $688.11B | 35.98 | 52.15% | 0.61% | 10.35% | 16.40% | |
80 Outperform | $524.16B | 41.40 | 198.52% | 0.48% | 12.07% | 17.27% | |
74 Outperform | $36.82B | 13.06 | 13.62% | ― | 10.06% | 38060.98% | |
73 Outperform | $66.75B | 16.88 | 20.31% | ― | 7.10% | 4.45% | |
73 Outperform | $25.52B | 16.72 | 7.05% | 0.97% | 4.68% | 63.39% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% | |
51 Neutral | $37.02B | 49.29 | 2397.44% | 1.99% | -17.38% | ― |
* Financial Sector Average
Performance Comparison
PYPL
PayPal Holdings
67.48
9.21
15.81%
FIS
Fidelity National Info
69.89
1.41
2.06%
GPN
Global Payments
99.54
-28.14
-22.04%
MA
Mastercard
555.07
90.19
19.40%
V
Visa
352.23
74.92
27.02%
XYZ
Block
59.43
-15.00
-20.15%
PayPal Holdings Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -24.61% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
PayPal's earnings call highlighted a strong financial performance in 2024 with significant growth in branded checkout, Venmo monetization, and BNPL. The introduction of innovations and strategic partnerships set a solid foundation for future growth. However, challenges such as unbranded volume growth deceleration and international market softness were notable. Overall, the sentiment reflects a positive outlook for the company's growth initiatives despite some headwinds.Highlights
Strong Financial Performance in 2024
PayPal delivered $32 billion in revenue, up 7%, and non-GAAP earnings per share increased 21% year-over-year. Free cash flow was $6.8 billion, with $6 billion in share buybacks completed.
Growth in Branded Checkout and Venmo
Branded checkout transaction margin dollar growth was achieved in each quarter, and Venmo monetization saw over 20% growth in debit card and Pay with Venmo monthly active accounts. Venmo's total payment volume grew 10%.
Expansion in Buy-Now-Pay-Later (BNPL)
PayPal drove approximately $33 billion in BNPL total payment volume, growing 21% from the prior year, indicating strong consumer and merchant trust in the PayPal brand.
Innovations and Partnerships
In 2024, PayPal rolled out new branded checkout experiences, launched PayPal Everywhere, introduced Fastlane, and expanded PayPal Complete Payments. Partnerships with NBCUniversal, Roku, and StockX were signed to drive Fastlane adoption.
Successful Omnichannel Push
PayPal launched PayPal Everywhere in September, which drove significant increases in debit card adoption, with debit card TPV up nearly 100% in Q4.
Lowlights
Challenges in Unbranded Volume Growth
Unbranded volumes decelerated as PayPal pursued a price-to-value strategy, resulting in a 5-point revenue growth headwind from Braintree renegotiations expected in 2025.
Pressure from Interest Rate Changes
PayPal expects a $150 million headwind due to interest rate cuts in 2025, impacting transaction margin dollars.
Softness in International Markets
Less than a full point international pullback was observed, with some softness in Europe affecting transaction margin growth.
Company Guidance
During PayPal's Fourth Quarter and Full Year 2024 Earnings Call, the company outlined a strong financial performance and provided guidance for 2025. In 2024, PayPal achieved a 10% growth in total payment volume, reaching nearly $1.7 trillion, and a 7% increase in revenue, amounting to $32 billion. Non-GAAP earnings per share rose by 21% year-over-year, and free cash flow totaled $6.8 billion, with $6 billion in share buybacks completed. For 2025, PayPal anticipates continued transaction margin dollar growth and strong free cash flow. Key areas of focus include innovation, product adoption, partnerships, and efficiency, with goals to enhance branded checkout, scale omnichannel solutions, grow Venmo, and accelerate small and medium business (SMB) engagement. The company also highlighted the implementation of AI to improve customer experience and operational efficiency.PayPal Holdings Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
PayPal Appoints Jamie Miller as CFO/COO
Positive
Feb 25, 2025
On February 25, 2025, PayPal announced the appointment of Jamie Miller as Chief Financial and Operating Officer, coinciding with its Investor Day event. During the event, PayPal reaffirmed its 2025 financial guidance and introduced a strategic growth outlook through 2027, including the launch of PayPal Open, a unified merchant platform, and expanded partnerships with Verifone and J.P. Morgan Payments to enhance its global commerce capabilities.
Executive/Board Changes
PayPal Announces Executive Departure and Transition Plan
Neutral
Jan 22, 2025
On January 20, 2025, PayPal announced the upcoming departure of John Kim, its Executive Vice President and Chief Product Officer, effective March 31, 2025. Under a Separation Agreement, Kim will receive severance pay, bonuses, and benefits due to a ‘Qualifying Termination,’ ensuring a smooth transition for the company and its stakeholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.