PayPal: Unattractive Given Far Better Opportunities (Archive)
PayPal’s weak growth, margin pressure and insider selling make the stock unattractive.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- I had a 'Neutral/Hold' view on PayPal stock, but was able to capture +2.57% of alpha from a tactical bullish play since my update. Now, I am downgrading my stance.
- PayPal's quality of growth continues to be weak as it fails to grow active accounts. Consumer surveys suggest loss of user share.
- Q1 FY24 gross margins saw a 100bps decline, but I expect future quarters to be worse in the absence of certain tailwinds.
- There have been a couple of notable insiders, each selling ~25% of their stake in PayPal.
- PayPal needs to grow 4x faster to match the attractiveness of NVIDIA, considering a combination of valuation and growth expectations.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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