PYPL - PayPal: An Undervalued Profitable Growth Stock

2024-07-13 05:30:55 ET

Summary

• PayPal's new management is refocusing the business to improve profitability.
• PayPal is diversifying into digital advertising and is in a prime position as merchants try to find alternative advertising channels.
• Fastlane can be the sustainable innovation PayPal needs to protect its market share against the competition.
• Unbranded business is a drag on PayPal's margin, but things can turn around as PayPal turns its attention towards Small and Medium businesses.
• PayPal's new management will emphasize profitable growth as the payment segment consolidates.

Investment thesis

Financial Institution inefficiency, digitalization, and regulation, such as PSD2 , led to the explosive growth of fintech, which proliferated into payments, insurance, asset and wealth management, and real estate. PayPal Holdings Inc. ( PYPL ), the leading US fintech payment company, benefitted from this industry development by providing a secure and frictionless payment experience.

With competitors such as banks, big tech, and other fintech companies eager to grab a slice of this fintech segment, PayPal is at a crucial inflection point. It needs to respond or risk losing market share to its competitors. ...

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