PayPal Holdings Inc (NASDAQ:PYPL) stock is up 3.5% in premarket trading, after the fintech company issued an upbeat 2027 margin growth outlook and reaffirmed its 2025 forecast. PayPal also laid out plans to drive $2 billion in revenue for Venmo by 2027, including boosting merchant adoption, retaining funds within the online payments platform, and encouraging in-store and online spending.PYPL yesterday snapped a three-day losing streak, and is looking to add to its 27.2% year-over-year lead. The security has ...

At PayPal's first investor day in four years, CEO Alex Chriss will deliver a clear message to shareholders: Venmo isn't just an easy way to split the dinner tab.Chriss, who took the helm in September 2023, is trying to spur a turnaround at the payments company, and Venmo is a key part of his effort. The company told investors in New York on Tuesday that Venmo can top $2 billion in revenue by 2027. The last time PayPal provided an annual revenue figure for Venmo was 2021, when it was about $900 million. For ...

Core Insights - PayPal is positioning itself as a leading commerce platform with a focus on profitable growth, expecting high single-digit transaction margin dollar growth and low teens+ non-GAAP EPS growth by 2027 [2][3]. Financial Outlook - The company reaffirmed its 2025 financial guidance, projecting at least 5% growth in transaction margin dollars (TM $) excluding interest on customer balances, with a longer-term ambition of 10%+ growth by 2027 [3]. - Non-GAAP EPS is expected to grow by 6-10% in 2025, with a target of low teens+ growth by 2027 and a longer-term ambition of 20%+ growth [3]. New Offerings - PayPal introduced a new unified merchant offering called PayPal Open, which aims to provide a comprehensive platform for businesses to integrate various commerce tools [4]. - The company announced a strategic omnichannel partnership with Verifone to enhance payment acceptance solutions for enterprise merchants, combining Verifone's hardware with PayPal's processing capabilities [5]. - PayPal's Fastlane service, which accelerates guest checkout speeds by over 36%, is expanding to international markets through a partnership with J.P. Morgan Payments [6].

Core Perspective - PayPal's primary objective is to enhance the checkout experience, as emphasized by CEO Alex Chriss during the Q4 2024 earnings call, with a strategic partnership with Verifone marking a significant step towards this goal [1] Group 1: Partnership and Strategy - The collaboration with Verifone combines its global hardware presence of approximately 35 million terminals with PayPal's Braintree processing infrastructure, now rebranded as PayPal Enterprise Payments, aiming to create an omnichannel platform for large retailers and global merchants [2] - This partnership is part of PayPal's strategy to capture enterprise clients amidst increasing competition in retail payment solutions, focusing on reducing operational costs and improving authorization rates for merchants [3] - PayPal Open serves as the orchestration layer for enterprise merchants, providing access to value-added services like fraud management and chargebacks through a single integration, simplifying the integration process for merchants [4] Group 2: Market Dynamics and Consumer Behavior - Despite the digital shift, PayPal acknowledges that plastic cards will remain prevalent at physical checkouts, indicating that "winning checkout" involves enhancing payment methods rather than replacing cards [5] - The company is adopting a dual approach to changing consumer behavior by collaborating with existing wallets and preparing for future technologies like biometrics, which could enable checkout without a physical device [6] - PayPal aims to personalize the shopping experience by leveraging technology to identify shoppers, bridging the gap between online and physical retail through its partnership with Verifone [7] Group 3: Future Outlook - The expanded partnership with Verifone not only represents technological advancement but also reflects PayPal's ambition to orchestrate commerce through its two-sided network, benefiting both consumers and merchants [8] - The new strategy is expected to be implemented during the 2025 holiday season at select enterprise-level retailers, indicating a forward-looking approach to enhancing the retail payment landscape [8]

Core Insights - PayPal is poised to redefine its business payments strategy with the launch of PayPal Open, consolidating various offerings into a single brand [2][3] - The initiative aims to enhance PayPal's presence in the B2B sector, moving away from its traditional consumer-facing identity [3][4] - The name "Open" was chosen after extensive market research and internal discussions, reflecting PayPal's trusted brand status [5] Company Strategy - The launch of PayPal Open consolidates offerings such as Braintree, Zettle, Hyperwallet, and Chargehound into one cohesive brand [2] - The strategy was initiated after customer feedback indicated a lack of awareness about PayPal's diverse offerings [2] - The company aims to establish itself as a significant player in the B2B market, similar to successful transitions seen in other consumer brands like Amazon Web Services [4] Financial Performance - CEO Alex Chriss has focused on improving transaction margins and monetizing key acquisitions, notably Braintree, which processed nearly $600 billion in total payment volume last year [4]

Core Insights - Zacks Premium provides tools for investors to enhance their stock market engagement and confidence, including daily updates, research reports, and stock screens [1][2]. Zacks Style Scores - Zacks Style Scores are indicators that rate stocks based on value, growth, and momentum, helping investors identify stocks likely to outperform the market in the next 30 days [2][3]. - Stocks are rated from A to F, with A indicating the highest potential for outperformance [3]. Value Score - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales, appealing to value investors [3]. Growth Score - The Growth Score assesses a company's financial health and future outlook, analyzing projected and historical earnings, sales, and cash flow to find sustainable growth opportunities [4]. Momentum Score - The Momentum Score capitalizes on price trends, using factors like recent price changes and earnings estimate shifts to identify favorable investment times [5]. VGM Score - The VGM Score combines Value, Growth, and Momentum Scores, providing a comprehensive indicator for investors seeking a balanced approach [6]. Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [7][8]. Stock Selection Strategy - To maximize returns, investors should target stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B, while also considering the direction of earnings estimate revisions [9][10]. Company Spotlight: PayPal (PYPL) - PayPal is recognized as a leading online payment solutions provider, holding a Zacks Rank of 2 (Buy) and a VGM Score of B, with a Value Style Score of B due to a forward P/E ratio of 14.94 [11]. - Recent analyst revisions have increased PayPal's earnings estimate for fiscal 2025 by $0.12 to $5.02 per share, with an average earnings surprise of 14.3%, making it a strong candidate for investment [12].

Core Viewpoint - Paypal's stock has recently underperformed, returning -13.5% over the past month compared to the S&P 500's +2.2% and the Zacks Internet - Software industry's -3.1% [2] Earnings Estimate Revisions - The consensus earnings estimate for the current quarter is $1.16 per share, reflecting a year-over-year decline of -17.1%, with a recent upward revision of +4.4% [5] - For the current fiscal year, the consensus estimate is $5.02, indicating a year-over-year increase of +8%, with a +2.5% change over the last 30 days [5] - The next fiscal year's consensus estimate is $5.63, showing a +12.1% change from the previous year, with a +4.2% revision in the past month [6] - The Zacks Rank for Paypal is 2 (Buy), indicating a positive outlook based on earnings estimate revisions [7] Revenue Growth Forecast - The consensus sales estimate for the current quarter is $7.83 billion, representing a year-over-year increase of +1.7% [9] - For the current fiscal year, the revenue estimate is $33.01 billion, indicating a +3.8% change, while the next fiscal year's estimate is $35.17 billion, reflecting a +6.6% change [9] Last Reported Results and Surprise History - In the last reported quarter, Paypal generated revenues of $8.37 billion, a year-over-year increase of +4.2%, with an EPS of $1.19 compared to $1.48 a year ago [10] - The reported revenues exceeded the Zacks Consensus Estimate of $8.23 billion by +1.67%, and the EPS surprise was +5.31% [11] - The company has consistently beaten consensus EPS estimates in the last four quarters and topped revenue estimates three times during this period [11] Valuation - Paypal has a Zacks Value Style Score of B, indicating it is trading at a discount compared to its peers [15]

Core Viewpoint - PayPal has experienced fluctuations in stock performance, with a notable decline following the pandemic as consumer behavior shifted, leading to questions about its potential recovery from current sub-$80 levels [1] Company Overview - PayPal is a well-established digital payments platform that facilitates various types of transactions, including online, mobile, and in-person purchases [2] - The PayPal app is the leading mobile digital payment platform in the U.S., significantly outperforming competitors like Block's Cash App and Zelle [3] User Base and Revenue - As of the end of Q4 2024, PayPal had approximately 434 million total accounts, contributing to substantial revenue generation, with transaction revenue reaching nearly $7.6 billion in that quarter [4] - PayPal's total revenue for Q4 was just under $8.4 billion, reflecting a 9% year-over-year growth, which is comparable to the growth rates of major competitors like Visa and American Express [5] Profitability and Margins - PayPal's profitability has been declining, with non-GAAP adjusted net income decreasing by 2% year-over-year to just over $1.2 billion [6] - The company's gross margins have notably decreased from around 60% during the pandemic to the mid-40% range, indicating a trend of less impressive growth and profitability [7] Management Initiatives - Under the leadership of new CEO Alex Chriss, PayPal is implementing strategies to enhance brand adoption and competitive positioning, including a marketing campaign featuring Will Ferrell and the introduction of Fastlane technology for smoother online transactions [8] - While these initiatives show promise, they require time to gain traction, as consumers still predominantly associate convenience with traditional credit cards rather than PayPal [9] Investment Outlook - PayPal is viewed as a stock that may benefit patient investors willing to endure potential short-term disappointments, supported by a solid user base and a strategic plan for future growth [10]

Trade Wars and Economic Impact - The ongoing trade tensions between the U.S. and Canada are perceived as a unilateral abrogation of trade agreements, particularly the revised free trade agreement that replaced NAFTA [8][9] - Canadian reactions to U.S. tariffs are largely negative, with sentiments of insult and disbelief regarding the suggestion of Canada becoming a 51st state [4][10] - The Canadian Prime Minister, Justin Trudeau, has seen a temporary boost in support due to the trade spat, despite his unpopularity [10][11] - The economic consequences of trade wars are concerning, as they can lead to inflation and increased costs for consumers on both sides of the border [12][13] PayPal's Financial Performance - PayPal's recent earnings report showed a 7% increase in transaction margin dollars, although the take rate has slightly decreased [16] - The market reacted negatively to PayPal's performance, with a drop of about 9%-10% in stock price, despite a 30% increase over the past year [16][17] - PayPal announced a $15 billion share repurchase authorization, which is significant for an $80 billion company, indicating confidence in its valuation [17][18] - Concerns were raised about the effectiveness of buybacks if they do not significantly enhance shareholder value, especially if new shares are issued simultaneously [19]

Core Insights - PayPal announced its FY 2024 earnings on February 4th, 2025, with expectations for revenue growth [1] Financial Performance - The company is known for its payment processing system, which serves millions of users globally [1]