2024-02-13 16:22:23 ET
Summary
- Previous valuation projected fair price at $56, now at $58.9 (+3.99%).
- PayPal's stock declined by 7.33% since the first article, aligning with my bearish predictions.
- Q4 2023 earnings prompted two DCF models: one suggests 58% undervaluation, the other 12.4% overvaluation.
- PayPal's estimated Q1 2024 YoY net income growth of 8.7% conflicts with the first model's 16.22% requirement.
- Holding stance taken; target price deferred pending Q1 2023 performance assessment.
Thesis
I n my previous article about PayPa l Holdings, Inc. ( PYPL ) from November 2023, I raised concerns over the declining net income and revenue growth, and I rated the stock as a hold as well as assigning a conservative $56 target. This thesis has materialized since PayPal needed to achieve an FY net income of $5.3 billion by Q4 2023 in order to deliver a 117% upside per my models. However, this was not the case since net income stood at $4.24 billion for FY2023. Furthermore, the company issued a weaker than expected forecast for Q1 2024, reinforcing my previous thesis, indicating that this trend would be difficult to revert because of the little differentiation between fintech companies. Since then, PayPal stock has increased by 3.99%, but overall, it has decreased since my first article by 7.33%. ...
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For further details see:
PayPal Q4: Don't Expect A Meta Rally