Is PayPal Stock a Buy, Sell or Hold Post 17% Year-to-Date Dip?

Core Viewpoint - PayPal's stock has faced significant declines due to increased competition in the fintech sector and a challenging macroeconomic environment, but its strong portfolio and expanding partner base present long-term investment opportunities [1][20]. Financial Performance - PayPal shares have dropped 17% year to date and 24.3% since reaching a 52-week high of $93.66 on December 9, 2024 [1][2]. - The stock is currently trading at a forward 12-month P/E of 13.7X, which is a significant discount compared to the industry average of 23.56X [2]. - Over the trailing 12 months, PayPal shares appreciated 6.5%, underperforming the industry’s 17.7% growth [5]. Operational Highlights - Total active accounts increased by 2% year over year to 434 million in 2024, with payment transactions rising 5% to 26.33 million [11]. - Total payment volume (TPV) grew 10% year over year to$ 1.68 trillion, with transaction margin in dollar terms increasing by 7% [12]. - The Buy-Now-Pay-Later TPV surged 21% year over year to $33 billion [12]. Strategic Initiatives - PayPal's Fastlane feature enhances the checkout experience, attracting new users, with 75% of Fastlane consumers being new or dormant users [13]. - The launch of FX-as-a-service and network tokens for automated billing is expected to drive transaction margins [14]. - PayPal Everywhere initiative led to a nearly 100% increase in debit card TPV, with over 1.5 million first-time debit card users added in Q4 2024 [15]. Partnerships and Collaborations - PayPal's partnerships with companies like Fiserv, Adyen, Amazon, and Shopify are enhancing its market prospects [16][17]. - Integration with Shopify Payments and collaborations with Apple and Google for Venmo debit card integration are noteworthy developments [17]. Earnings Guidance - PayPal expects non-GAAP earnings per share growth of 6-10% for 2025, with higher growth anticipated for 2027 [19]. - The Zacks Consensus Estimate for 2025 earnings is$ 5.02 per share, indicating a 7.96% growth over 2024 [19]. Conclusion - PayPal's robust portfolio, expanding partner base, and attractive valuation make it appealing for long-term investors, despite facing short-term competitive pressures [20].