Key Factors Investors Should Consider Before Buying PayPal

Summary:

  • 18 months ago, it was fairly obvious PayPal stock was a sell. Now that the price has dropped significantly, the stock is getting more interesting.
  • Analysts have proven unreliable in their earnings predictions over the past two years and are likely to be wrong again over the next 24 months.
  • A potential coming recession may also put pressure on PayPal’s earnings. Investors will have to decide for themselves what basic assumptions to make regarding earnings.
  • This article shares the factors I’m considering, and why I’m continuing to be patient before buying the stock.

:Silhouette of upset Australian woman over PayPal logo

chameleonseye

Introduction

The format of his article is going to deviate a little bit from my typical valuation format where I explain my valuation process and the price I would be willing to buy or sell a stock. I’ve already

Chart
Data by YCharts

Chart
Data by YCharts

PayPal's earnings history

FAST Graphs

Trough EPS 10-Year Earnings Growth Estimate Buy Price
$5.00 15% $85.00
$5.00 10% $64.00
$5.00 5% $48.00
$4.00 15% $68.00
$4.00 10% $51.00
$4.00 5% $39.00
$3.00 15% $51.00
$3.00 10% $38.00
$3.00 5% $25.00


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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