FedNow Makes PayPal A Value Trap

Summary:

  • PayPal is about to face serious competition at an infrastructure level it can’t compete with.
  • PayPal may prove sticky with current users, but FedNow makes PayPal’s user acquisition value proposition unclear.
  • PayPal is a third party instant settlement network that will suffer from reduced network effects.
  • The company is overvalued in light of this, and we think the shares have 25%+ further downside potential.

Third-Party Payment Apps

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A little over a year ago, when PayPal (NASDAQ:PYPL) had just dipped below the $100/share price point, we wrote an article titled “PayPal: A Dream Entry Point In A Long-Term Compounder“. Broadly speaking, the thesis of

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