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PayPal: A Value Play Positioned for Steady Long-Term Growth

  • Writer: Nick Hardy
    Nick Hardy
  • May 17, 2025
  • 2 min read

I recommend buying PayPal ($PYPL) with a timeline of 1 year and beyond. While PayPal’s hyper-growth phase may be behind it, the company remains a dominant force in digital payments and a great value stock with steady growth for years to come. A key driver of this growth is Venmo, which many people do not realize is owned by PayPal. Additionally, PayPal’s expanding product lineup including debit cards and Buy Now, Pay Later solutions positions it for sustained revenue growth. With a strong brand, a cheap valuation, and a world that is increasingly adopting digital payment services, PayPal is well positioned for returns in the years ahead.



After undergoing multiple quarters of flat or decreasing profit margins, PayPal decided to bring in new CEO Alex Chriss in September of 2023. Chriss, a former executive at Intuit, has emphasized a strong focus on PayPal’s profitability going forward. Though the full effect of his actions will take a reasonable amount of time to be seen, results were shown in Q3 of 2024 with operating income increasing over 18% while revenue maintained similar growth to that of the previous year. Chriss drove operating income growth through a renewed focus on operational efficiency and strategic cost optimization. This focus on profitability will further an already cheap valuation lower. PayPal currently sits at a forward P/E of 13 with an industry average of around 33.



Despite this very low valuation on PayPal, it will continue to be driven even lower by not only their focus on profits, but also their share buyback program. In PayPal’s recent earnings conference, Chriss announced a new $15 billion dollar buyback program for PayPal. This brings PayPal’s current share buyback authorization to just around $20 billion dollars (PayPal). Lowering their outstanding shares dramatically, combined with their margin focus, will lead to a rocketing EPS over the next couple quarters, which will have a great impact on the company’s P/E.



While this is a clear compelling value opportunity, investors should still consider the challenges PayPal must face in the digital payment industry. Competitors such as Apple Pay, Google Pay, Stripe, and Block will look to continue to expand their market share. This competition should not be a very big worry though, as the digital payment market is expected to grow to north of about $350 billion by 2030 from $92 billion today (Grand). This massive growth will allow each of these companies to maintain solid volume and growth.



To conclude, PayPal does not carry extremely high upside, but it does offer a very safe investment in an industry that will continue to grow going forward. With a cheap valuation, a renewed focus on profitability under Alex Chriss, and an aggressive share buyback program, PayPal is very well positioned to provide steady gains going forward.



References:


"Digital Payment Market Size To Reach $361.30 Billion By 2030." Grand View Research, April 2025, https://www.grandviewresearch.com/press-release/global-digital-payments-market


"PayPal Board Approves New $15 Billion Stock Buyback." Morningstar, 4 Feb.2025, https://www.morningstar.com/news/dow-jones/202502044937/paypal-board-approves-new-15-billion-stock-buyback.


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