PayPal Stock Fundamental & Technical Analysis


PYPL

Chart done on daily candles. Many stocks in different sectors and industries have enjoyed a strong reversal from their 2022 lows this year, but names like PayPal and Square have stayed near the bottom, despite seemingly healthy earnings. Taking a further dive into PayPal’s earnings, we notice there’s a significant drop in revenue growth from 2020-2021. PayPal saw an influx of online transactions when the pandemic lockdowns forced buyers online, which also helped boost their net income by 100%; however their bottomline has dropped back by 50% to pre-pandemic levels. Their inability to sustain the strong bottomline is overshadowing their optimistic revenue.

Another critical point to take into consideration is PayPal’s lack of innovation and how competition may run them out of business. Transaction processors like Apple and Google Pay have grown in popularity, and their utility is much more ergonomically friendly to both set-up and use. Some will argue that Venmo is a great innovation, and it is, but it is not proprietary technology since competitors like Zelle offer a faster and most importantly, free, technology right from one’s bank account. 

As of now, PayPal doesn’t seem to be going anywhere, but markets are forward looking, which means they want to see actions taken by the company to keep itself alive and growing. If the company is not growing, they at least want to see it moving to a point where it potentially pays a dividend and makes it worth holding.