PayPal: 32% Down From Peak After Q3 Results, With Potential To Double
(Preview) Company Update (PYPL US) (Buy)
Summary
PayPal shares fell 10.5% the day after Q3 results last week and, at $212.54, is down 32% from its July peak - a great bargain in our view.
Q3 volume was flat from Q2, revenues and EBIT were both lower, the 2021 guidance was cut, and new 2022 expectations disappointed.
The near-term negatives were related to COVID-19 and the planned migration of eBay volumes; medium-term guidance is unchanged.
PayPal continues to build its ecosystem, with Venmo to be added to Amazon, Buy Now Pay Later growing and its "super app" expanding.
In our Upside Case, PayPal stock can more than double by 2024 year-end and, in our Downside Case, the total return is still 56%. Buy
Introduction
We review our PayPal investment case following Q3 2021 results released post-market last Monday (November 8). PYPL stock fell 10.5% the following day and is now 32% below its $310 peak in July.
We upgraded our rating on PayPal to Buy in May 2020. Even after its recent fall, PayPal stock has gained 52.6%, though it is down 9…