PayPal: Growth Outlook Still Disappointing (Downgrade)


  • PayPal’s price action has been muted due to a lack of growth catalysts and a decline in active customer accounts.
  • Transaction revenue has shown some signs of a rebound, but net revenue growth remains in the single digits.
  • Active customer accounts have declined for three consecutive quarters, highlighting the need for customer adoptions to sustainably boost volumes.
  • Margin expansion on unbranded is the key, as overall margins have stabilized but remain flat over the past few quarters.
  • The stock’s valuation multiples look very cheap but remains a value trap as the growth outlook keeps disappointing investors.

Customer paying for her order with smart phone, at the curbside pickup

fotostorm/E+ via Getty Images

Investment Thesis

PayPal Holdings (NASDAQ:PYPL)’s price action has been muted for the past year due to a lack of growth catalysts and a deterioration in active customer accounts. In my previous

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.

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