Is PayPal Stock a Buy Before Feb. 4?

Core Viewpoint - PayPal is experiencing a significant transformation and is expected to report its fourth-quarter earnings on February 4, with shares having increased by 38% over the past year, although still over 70% below its all-time high from 2021 [1][2]. Company Transformation - PayPal is a global leader in online payment processing, operating in over 200 countries, and is evolving from its traditional e-commerce focus due to competition from emerging fintech players [3]. - The company reported 432 million active customer accounts, which is a 1% increase year-over-year but remains flat compared to four years ago [3]. Growth Strategies - PayPal is enhancing monetization by increasing user engagement and payment volumes through expanded service offerings, with transactions per active account (TPA) rising by 9% year-over-year in Q3 [4]. - The launch of FastLane, which simplifies the payment process by requiring only an email address, is a significant move for 2024, extending its merchant feature to major payment providers [5]. - The company's omnichannel approach and focus on mobile payments indicate a future of stronger and more consistent profitable growth [6]. Q4 Earnings Expectations - The market is anticipating PayPal's Q4 earnings, with management projecting "low single digit" revenue growth and adjusted EPS between $1.07 to$1.11, reflecting a modest decrease from the previous year due to increased marketing and product investments [7]. - There is potential for the headline numbers to outperform expectations, supported by a resilient U.S. economy and positive consumer confidence indicators [8]. Long-term Outlook - For full-year 2024, PayPal anticipates adjusted EPS growth in the "high teens" and free cash flow of $6 billion, up from$4.2 billion last year [9]. - Key metrics to monitor include monthly active accounts (MAA) and total payment activity (TPA) to assess brand momentum and market position [9]. - The stock is viewed as attractive, trading at approximately 18 times the consensus 2025 EPS, suggesting a potential bargain for long-term investors [11].