2024-06-13 17:09:30 ET
Summary
- PayPal's growth and margin outlook has improved due to product innovations and a focus on unbranded checkout, which makes sense as a strategic move for the company.
- With a de-risked business model, a stronger revenue growth outlook, and a discounted valuation, PYPL shares may have reached a 'bottom', offering a solid margin of safety to investors.
- Selling put options on PYPL appears to be the optimal play to capitalize on the situation, receiving an immediate cash payout as the company's operational transition continues.
- We're upgrading PYPL to a 'Hold'.
About a year ago, we published our first bearish article on PayPal ( PYPL ).
Titled " FedNow Makes PayPal A Value Trap ", the article talked at length about how changes in the payments landscape, including the introduction of FedNow, had driven our negative view on the company's growth and margin outlook.
At the time, new customer growth was slowing considerably, and we estimated that it was poised to decelerate further on the back of scaled competition and proposed structural market changes that could render PYPL's core P2P proposition obsolete. This would then (in theory) result in a weakened value proposition to businesses, in addition to a less inspired multiple from investors....
Read the full article on Seeking Alpha
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PayPal: Sell Options As The Fundamentals Improve For High Potential Yields