PayPal Holdings payment service is far from the highs

PayPal Holdings Inc. (PYPL) is trading almost 70% below 52-week highs. Is this a suitable moment to enter? The PayPal ecosystem is expanding because of new services that also help to increase the volume of payments. In 2021, the company secured $1.3 trillion in payments, which is 33% higher year-on-year. Most of the transactions occurred in the core business of processing digital payments.

In addition, the popularity of other applications is growing rapidly, such as the Venmo peer-to-peer payment platform (has over 83 million users), the PayPal Ventures investment platform, the Honey platform offering discounts from over 30,000 retailers, as well as the “buy now, pay later” installment platform gaining popularity in the United States and other regions.

Now PayPal is a multifunctional service for the largest possible number of users. As a result, in 2021, PayPal Holdings’ revenue amounted to $25.4 billion, an increase of 18% year-on-year. The problem was a 2% decrease in profit to $4.2 billion. Since profits have been growing in recent years, we can assume that the decline in profits in 2021 was a temporary phenomenon after the acute phase of the COVID-19 pandemic. It is worth paying attention to the growth dynamics of PayPal quotes.

The average annual growth since the IPO in 2015 was approximately 18%. However, there is no certainty that the company will continue to maintain the long-term dynamics of quotations, as it is sometimes difficult to predict the reaction of investors to some of the company’s initiatives.

So, recently quotes have been declining because someone dissatisfied investors with the concentration of PayPal Holdings’ efforts on monetization of the current customer base, and not on increasing the number of subscribers. Thus, the key business indicators of PayPal Holdings allow the company to continue growing. However, there is no guarantee yet that the quotes will repeat the trajectory of revenue growth.