PayPal Holdings, Inc. (PYPL) saw strong momentum over the past year, significantly outperforming the S&P 500 and rising by approximately 150.0% compared to the S&P’s gain of about 19.8%.
PayPal is an American company with a technology platform that enables digital and mobile payments on behalf of merchants and consumers and supports online money transfers between friends and family. PayPal rebounded from a dip in performance around March of 2020 when the coronavirus pandemic gained traction in the United States. However, the poor performance quickly reversed as investors soon realized the benefits the pandemic would have as consumer shopping habits shifted online. Many businesses were forced temporarily to close with consumers adhering to social distancing guidelines. There was a shift to online technology for money management, including online shopping through digital payments. Despite the company soaring to new revenue heights, PayPal did slide on the WhaleWisdom HeatMap to a ranking of 34 from 16.
Hedge Funds Are Selling
Despite PayPal’s gains, hedge funds and institutions were selling in the third quarter. Hedge funds decreased their aggregate 13F shares held to approximately 226.6 million from about 237.5 million. Of hedge funds, 49 created new positions, 153 added to an existing holding, 25 exited, and 221 reduced their stakes. Institutions decreased their aggregate holdings to about 967.7 million from 980.0 million, a mild decrease of 1.3%.
Revenue Is on the Rise
Analysts have positive views on PayPal with year over year growth ranging from 15.8% to 20.8% over the next four years. Revenue is forecast to reach approximately $43.2 billion in 2024, up from $25.6 billion in 2021. Predicted increases may bring earnings to $11.37 per share by 2025, up from $4.55 for the fiscal period ending in December 2021.
Analysts appear enthusiastic about the stock. Mizuho Securities USA’s analyst, Dan Dolev, believes that the company is becoming the “ultimate financial ‘super app,’ that transcends across payments, commerce, and financial services.” PayPal recently announced the upcoming launch of a new cryptocurrency business unit, and this also has analysts’ attention. Keefe Bruyette & Woods Inc’s (KBW) analyst, Sanjay Sakhrani, shared similar sentiments and noted that the cross-generational behavior shift towards eCommerce creates the opportunity for sustainably higher earnings power.
Positive Overall Outlook
PayPal’s recent growth brings an encouraging outlook, as supported by future earnings estimates that show continued growth through 2025. Amidst the pandemic, this digital payment leader offers investors an opportunity as it continues to see increased demand for its services.