After a longer break again a stock analysis from me. This time without voting for the stock of the week, but since PayPal $PYPL has occupied the 2nd place for several weeks in a row anyway, this analysis was overdue.
The complete analysis in web article format can be found here:
https://investorsapiens.de/paypal-chartanalyse-aktienanalyse-aktie-a14r7u/
I don't know why I couldn't upload any images here at all this time, so only direct links to the images in the text.
1. PayPal the No. 1 online payment service
Preface to the PayPal chart analysis
In the past votes for the stock analysis of the week, PayPal occupied second place for several weeks in a row. With the publication of the quarterly figures on 08.05.2023 and a subsequent price drop of 20% within a few days, PayPal once again moved more into the focus and caused more and more discussions in forums and social networks with a historically low valuation.
The basic tenor: PayPal is finished, PayPal is history, Apple Pay replaces PayPal.
With this, I see the time for a PayPal analysis has come: We take a look at the latest news, figures, facts, analyst opinions and the long-term as well as medium-term PayPal chart analysis. After that, everyone should be able to form their own opinion about the PayPal share.
The company: PayPal
PayPal's history dates back to 1998, when the company was founded under the name "Confinity" by Peter Thiel, Max Levchin and Luke Nosek. Originally, the company focused on developing security software for mobile devices. In 2000, Confinity merged with X.com, an online banking company owned by Elon Musk, and changed its name to PayPal.
PayPal started as a payment system for eBay auctions and quickly revolutionized online commerce. The company allowed its customers to send and receive money securely and easily over the Internet. This led to tremendous growth, and PayPal quickly became the preferred and popular payment method for online purchases worldwide.
In 2002, PayPal went public and had an impressive IPO. That same year, the company was acquired by eBay, which immediately increased PayPal's popularity and usage. In the years that followed, PayPal expanded globally, building partnerships with major retailers and financial institutions.
In 2015, PayPal and eBay split into two independent companies. This allowed PayPal to focus more on its core businesses and further realize its growth potential. Since then, PayPal has become one of the leading global payments companies, operating in over 202 Märkten and 25 currencies worldwide.
PayPal's core businesses include online payments, merchant payment processing and peer-to-peer payments. The company offers its customers secure and convenient payment solutions that are attractive to both consumers and businesses. PayPal enables consumers to make payments using their PayPal account across the web, mobile devices and other platforms. For merchants, PayPal offers various tools and services to integrate payment options into their websites and apps.
In addition, PayPal has expanded its presence in the digital wallet space. PayPal entered the mobile peer-to-peer payments market with its acquisition of Venmo in 2013. Venmo allows users to send and receive money from each other easily and quickly through mobile apps. This expansion has helped PayPal continue to build its customer network and capitalize on new growth opportunities. Today, PayPal has over 435 million active users.
In recent years, PayPal has also entered the cryptocurrency space. The company allows users to buy, hold and sell cryptocurrencies such as Bitcoin, Ethereum and Litecoin. In a recent announcement to US-Börsenaufsicht (SEC) PayPal reported managing $943 million worth of cryptocurrencies. This reflects the growing trend and interest in digital currencies.
The PayPal competition
Not a day goes by that I don't come across a new discussion on Getquin, among other places, about the demise of PayPal. The main argument is usually Apple Pay, which is supposed to have replaced PayPal long ago. Is Apple Pay the PayPal killer?
Let's look at a pair of market share numbers.
How big is Apple's market share in Germany?
In 2023, Apple achieved a market share of total smartphone sales in Germany with the iPhone of around 34 Prozent.
How big is Apple's market share worldwide?
On the global market, Apple's market shares constantly range between 12 und 20 Prozent.
Can Apple Pay attract PayPal's market share? Yes. Can Apple Pay replace PayPal? Hardly.
According to a recent Statista survey (see image), 91% of respondents still use PayPal.
PayPal quarterly figures Q1 2023
The quarterly figures published on 08.05.2023 Q1 2023 earnings were positive and exceeded expectations.
Both profit and revenue were above the results of the previous year and also above forecasts.
Sales:
- 2023 earnings: USD 7.04 billion
- Forecast 2023: USD 6.98 billion
- Variance: +0,86 %
- Prior year Q1 2022: $6.48 billion
- Q1 2022 variance: +8,64 %
Earnings per share:
- Q1 2023 earnings: $1.17
- Q1 2023 forecast: $1.10
- Variance: +6,36 %
- Prior year Q1 2022: $0.88
- Q1 2022 deviation: +32,95 %
Currently, PayPal's share price is at the 2017 price level and has a P/E ratio of 26 today.
For comparison, some key figures of PayPal from 2017:
- Revenue: $13.09 billion (Q1 2023 $7.04 billion)
- Earnings per share: $1.32 (Q1 2023 $1.17)
- Active users: 226 million (Q1 2023: 435 million)
- KGV: 50 (Q1 2023: 26)
Here we can see that the stock is trading at a more than double discount compared to 2017. We have the same share price valuation today with twice the number of users, first quarter (3 of 12 months) 2023 revenue is more than half of the full year 2017 revenue. The difference is even more pronounced in earnings per share. 2017 annual earnings were only 15% higher than 2023 first quarter earnings.
PayPal latest news and dates
Dan Schulman (65) the president and CEO of PayPal announced his retirement as president and CEO of PayPal on February 09, 2023 at the end of 2023. He has been CEO of PayPal since 2015 and took over the company after the separation from eBay. He is moving to the board of directors. His successor has not yet been announced.
The company, which was founded by star investor Ray Dalio takes advantage of the decline in the share price to buy more shares. According to a notification to the US Securities and Exchange Commission (SEC), Bridgewater Associates has increased its stake in PayPal by almost 60 percent to 1.55 million shares.
In particular, the announcement of the new CEO can provide a significant price movement both up and down.
2. 48 Analyst Opinions on PayPal
The current analyst sentiment as of 05/14/2023 on. Consorsbank / FactSets looks as follows. Out of a total of 48 analysts rate:
- 29 buy
- 5 overweight
- 14 hold
- 0 underweight
- 0 sell
The analysts' sentiment is positive. The price potential for the year is currently seen at $93.50 at 51.46%.
3. PayPal chart analysis and technical analysis
PayPal chart analysis since 2015
After the spin-off from eBay, PayPal grew rapidly to become the No. 1 online payment service, and the company's valuation also soared to dizzying heights during the same period. In 6 years from 2015 to 2021, PayPal's share price increased by over 800%. The growth accelerated especially with the outbreak of the corona pandemic and the boom of online businesses.
In just a single year from 2020 to 2021, the stock price rose nearly 300%. Like most tech companies, PayPal marked its all-time high in mid-2021. Shortly thereafter, the general correction of the technology industry and a generally difficult interest rate environment began, followed by the Ukraine war and the end of the Corona pandemic.
PayPal Crash Chart Analysis
Since July 2021, the stock has been in a 2-year correction of about 80% so far after the formation of the double top. In February 2022, PayPal reached the Fibonacci retracement 23.6% from where the price started to recover, it went up almost 35%. However, with the start of the war, interest rates continuing to rise and the end of the corona pandemic, the recoveries were not sustainable and the price marked further lows. Within the last almost 12 months, the share price oscillated in a falling wedge. After the publication of the good quarterly figures, it went down with a massive volume spike and a sell off. Presumably, several stop-loss orders were triggered here.
PayPal indicators
In the long-term weekly chart, the RSI indicator is in the oversold territory. The MACD shows no clear signals in the long-term chart.
PayPal breakout or false breakout?
In the Daily Chart of PayPal chart analysis, with a candle duration of 1 day, the RSI indicator is in the oversold zone with a value of 29.57. MACD is also oversold, but a reversal signal is still missing. The price has fallen out of the falling wedge with a massive sell-off with a huge volume spike, triggering many stop loss orders.
Extremely high volume at a low is often a trend reversal point, since the sellers have already been taken out of the market, further selling pressure is usually missing.
4. PayPal Stock Analysis Result
Environment and News
The latest Q1 2023 numbers as of 08/05/2023 look good for PayPal stock. With the upcoming change of the CEO (Dan Schulman moves to the Board of Directors) by the end of the year and the lack of announcement of the successor, there are both opportunities and risks. Both upside and downside price turbulence should be expected here. The outlook for the full year 2023 is positive.
According to Statista, PayPal is still the clear number 1 among online payment services.
The current interest rate environment is weighing on PayPal, but a prospect of falling interest rates should have a stimulating and positive effect again.
Sentiment of the analysts
The analysts' sentiment is positive. The price target is promising at 51.46% at $93.50 for the year.
Recently, it was announced that Ray Dalio's hedge fund Bridgewater Associates has increased its investment in PayPal by 60%.
PayPal Chart Analysis
I'm repeating a statement here that I make very rarely because it happens so rarely. The last time I said this was with Tesla and Meta:
Quote from Meta ChartanalyseA correction extension, or in this case rather a crash of more than 77% and thus reaching the Fibonacci Retracment 23.6% is extremely rare and only occurs with insolvent companies.. This can be a unique opportunity for anti-cyclical prospective buyers.
Quote from Tesla Chartanalyse: The correction has already reached an extension to Fibonacci retracement 23.6%, which is sufficient for a non-insolvent company can be considered as sufficient. The Fibonacci retracement area reached is seldom significantly undershot.
Exactly this rare case we see here. PayPal is currently trading at a discount of 80% and well below the Fibonacci retracement 23.6% and thus the PayPal share is rated as an insolvency candidate. Which is also reflected in the discussions in the forums and social media. The share price is the same as in 2017, where in 2017 the number of active users, revenue and earnings per share were a fraction of what PayPal is presenting today.
Today, Meta's share price, which was declared dead just a few months ago, is +170% above its low. Tesla's share price at +117% above the low. No, that doesn't mean PayPal stock will immediately rise 100%. It is quite possible that PayPal will declare its insolvency at the annual general meeting and run towards 0, or that the share will rumble around at this level for another year; nothing is ruled out on the stock market and nothing is certain. But is an insolvency of PayPal likely or even decided?
Outlook
As a self-confessed anti-cyclic, I do not see any signs of insolvency in PayPal with the currently available information and thus see an undervaluation of the share. Everyone should form his own opinion and be aware of the risks. This is not a buy recommendation. This analysis is intended to bring a little variety to the monotonous "Apple Pay replaces PayPal" discussion and to make people think.
Notice: not an investment advice and not a recommendation to buy.
