PYPL - Paypal

Not a huge fan of Paypal, but there is no question that their business has a strong brand. Currently trading at $132, down from $300. Is their business slowing? Likely - but it seems they still have some value.



May I ask why apparently nobody here is interested? From $310 now to $82, trading at 2018 level.

Yes, the outlook for the whole year is not good, so they are currently not yet a bargain. But if this sell-off continues and they trade at $50-$60 I think they will be one longer term.

They have such a strong position, not just for buying goods (eBay is very strong in Europe and most Internet shops here also offer simple and smooth payment via PayPal): Most teachers of online Workshops or classes I take require payment either via direct bank transfer or PayPal, with the latter being far more convenient. So on a personal level I can’t imagine life without it and tend to generalize that.


May I ask why apparently nobody here is interested?

I am, I first bought at $180 a 2% position and doubled it down around $100. I like (?, I think I do) their long-term prospects.

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However, if we hit recession, how badly PYPL will be impacted? How Buy Now, Pay later going to perform? These are real risks/ concern.

Separately I like Mega banks, I already own a chunk of Citi, BAC, WFC. I have so much financial exposure, I am afraid to increase it. But if BAC goes to $30, I think I have to buy. BAC, by 2025 $5 EPS, and at least they will buy one billion shares between now and then.

The mega banks are oligopolies. They have Trillion dollar deposits, loans, and pretty strong balance sheet. As long as US GDP does ok, even a garden variety recession, they will be okay.

I don’t follow PYPL closely. Whenever I have looked at it, it looks expensive. Even now after the big drop from high, it is at 28 PE, or 21 fwd PE. Maybe the future growth justifies it. But they will face lots of competition from banks, Visa/MC, new fintechs etc, and its harder to predict the outcome.

In financial services BlackRock or Broadridge have wide and more predictable and durable moats and lower PE. In search, Google has probably the most formidable moat on the planet and a PE lower than Paypal’s

I would put my money in any of those three ahead of Paypal.

May I ask why apparently nobody here is interested? From $310 now to $82, trading at 2018 level.

Towards the end of 2021, I owned a small PYPL position and closed out the stake with a small gain.

When I looked at PYPL again in 2022, around $120/sh, I passed. Why? Crypto trading. Maybe crypto is less risky for Paypal because it just manages crypto trades. And maybe its more risky for Paypal because its involved in crypto.


May I ask why apparently nobody here is interested? From $310 now to $82, trading at 2018 level.

I picked some random numbers out of thin air, changed them arbitrarily, then did a million meaningless calculations on them.

If future valuation levels are no worse than the worst of them in the past six years based on the resulting trend line of real EPS,
and the trend of real earnings remains plausible for the present and near future,
then it’s a buy at $78.

Current price $87.

It’s up to the alert reader to decide if this better, or worse, than an astrological forecast.

Of course, it’s not useful either way, as it’s not actionable: the price is “too high”.
There is a way, though–
Writing an $85 cash-backed September put would give either an entry of $75.45 or a cash return on capital at risk of 12.4% = 44%/yr rate.
This might be a good candidate for repeated put writing, at least as long as the worries remain prominent and the premiums juicy.