PayPal's Growth Potential In The Coming Years The whole industry was trading at unreasonable levels last year and has now been correcting for months. Instead, it has performed more or less in line with how some of its peers performed. SoFi Technologies ( SOFI), Upstart Holdings ( UPST), and LendingClub ( LC) all saw their shares drop by 50% to 60%+ from the highs they hit last year. Instead, many other 'bubbly', overly expensive pandemic favorites among the fintech names have performed badly in recent months as well: Data by YCharts In 2022 alone, PayPal has dropped by 42%, and the company has lost about $240 billion in market capitalization from the highs seen last year. Valuations don't matter until they do, and those that chased PYPL without considering the high valuation paid the price.įor those that remained on the sidelines, or that locked in gains on the way up, the recent massive pullback could provide for a compelling entry point, however. Despite the fact that PayPal has continued to deliver solid business growth in the last two quarters, those that bought at the highs have seen their investment crash by around 70% - it will take a 200% increase in PayPal's share price for them to break even.

But for those that bought at historically high valuations, the story is different. That is a great thing to happen for those that bought before multiples started to expand and that sold at the top. Instead, these huge share price gains were primarily driven by massive multiple expansion. This was clearly not warranted by the underlying growth the company experienced. Instead, shares climbed from $108 at the beginning of 2020 to $310 at the peak, which equates to a 190% increase in its share price. PYPL's shares did not rise by 20% or 30% in 20. Looking at PYPL's share price history, the market was overreacting quite a lot to this compelling underlying growth. During the second half of 2021, growth slowed down but remained at a solid low-teens level. We see that PayPal was able to grow its revenue by around 20%-30% between Q2 2020 and Q2 2021, i.e. And indeed, 20 were very solid years for PayPal: On the back of rising e-commerce sales, investors were convinced that PayPal and its peers would grow massively in the pandemic environment.

This included PayPal Holdings and many of its peers in the fintech industry. Fintechs As A COVID Play Get Decimatedĭuring the first phase of the pandemic, some tech companies that were seen as pandemic beneficiaries saw their shares rally to new highs, even as the broad market was struggling. One can argue that investors should wait for shares to bottom out before stepping into a position, but the current very oversold condition could make a bounce likely in the near term. With the market seemingly in panic mode when it comes to PayPal, sending shares lower every day, investors with a long-term focus could benefit a lot from the current, pretty weak sentiment by buying when the market is fearful. PayPal has a solid long-term growth outlook I believe, even though it's not as dominant as some other payment companies, such as Visa ( V ) or Mastercard ( MA ).

From a very overvalued level, shares have now dropped to a below-average valuation. ( NASDAQ: PYPL) has seen its shares drop tremendously over the last couple of months. In the wake of a large-scale fintech sell-off, PayPal Holdings, Inc. Nattakorn Maneerat/iStock via Getty Images Article Thesis

Paypal stock price for 12 months