Should You Buy PayPal While It's Below $80?

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]