2024-05-08 13:55:37 ET
Summary
- I divested my PayPal stock because it did not align with my long-term portfolio focus, which requires operations with lasting and highly competitive durable moats.
- I believe a fair value for PayPal stock is around $99, indicating a potential 50% upside from the present $66 stock price over the next few years.
- I consider the days of radical innovation at PayPal to be gone. Instead, I think the company is focusing on optimizing its ecosystem. I believe PayPal won't deliver long-term alpha.
PayPal No Longer Fits In My Portfolio
I last covered PayPal in December 2023, and since then, I have divested my small investment in the company and reallocated the capital to other firms. The primary reason I chose to do this is that my investment in PayPal was hinged on value, and at the time, my portfolio strategy was evolving from one focused on value and growth to one much more focused on very long-term horizons, which is the portfolio strategy that I now conduct with. I currently look for companies to hold for 10+ years when possible, building my position in them over time and buying at favorable entry points because I believe it is much less risky and also less technical work to invest in quality businesses with strong durability and moats over the long term than to invest in price assets based on momentum and market sentiment factors....
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PayPal's Medium-Term Value Doesn't Mean Long-Term Alpha