Is Paypal Undervalued?
Well it's certainly been a roller coaster ride for one of the largest Fintech players in the world. Current market cap is $91 billion on revenue of $25 billion.
Growth is Slowing
Well it's certainly not what it once was. It's most recent quarter delivered growth of 7% which beat market expectations but is certainly not what is once was. The core business is still an incredibly attractive business, and once could easily argue that is easily warrants a higher multiple than 3.5 price / sales.
Interestingly, per user activity is up 11% YoY with an average of 47 transactions per active account. This is encouraging because PayPal have 429 million users on their platform, so the more the leverage their existing base the better.
Personally I like the expansion of their Pay in 4 initiative, its a far better product when combined with the core PayPal business, than the other products on the market.
Square is certainly an ever increasing threat to PayPal and definitely one to watch. How they integrate Afterpay will be interesting.
But PayPal for me has the potential to take their retained earnings and begin to acquire business, which then opens the door for expansion of the # of users. So personally I think PayPal has a lot of life left!