PayPal Holdings, Inc. (NASDAQ:PYPL) is among the ridiculously cheap stocks to buy now. As of December 26, PayPal Holdings, Inc. (NASDAQ:PYPL) has mixed analyst ratings, with 37% recommending buying the stock, 52% keeping a neutral stance, and the remaining 11% bearish on the stock. While the median price target of $75 reflects an upside potential of 25.06%, the highest and lowest price targets translate to an upside potential of 75.09% and a downside potential of 14.96%. On December 22, Mizuho trimmed th ...

Core Insights - PayPal's shares declined by 2.6% following the CFO's announcement that branded checkout growth is expected to be a couple of points lower in Q4 2025 compared to the previous quarter [1][9] Company Performance - The company has experienced consistent mid-single-digit growth in branded checkout for several quarters, with a total payment volume (TPV) growth of 8% on a currency-neutral basis in Q3 2025, and online branded checkout rising by 5% [2] - In Q4 2025, PayPal plans to invest one to two points of transaction margin dollars into product attachment and habituation, while higher operating expenses (OpEx) in 2026 are expected to slow growth in transaction margin dollars and earnings per share compared to 2025 [3] - PayPal has observed a decrease in consumer spending and average order value, attributed to macroeconomic uncertainty, although online shopping continues [4] Product Performance - The Buy Now, Pay Later (BNPL) service is growing consistently at 20% quarter-over-quarter, while Pay with Venmo has seen a significant growth of 40% quarter-over-quarter [5][9] Competitive Landscape - Other companies like Block (XYZ) and Mastercard (MA) are also expanding their services and product offerings, with Block focusing on new products across Square and Cash App, and Mastercard diversifying into services such as cybersecurity and data analytics [6][7] Valuation and Estimates - PayPal shares have declined by 28.9% year-to-date, underperforming the broader industry and the S&P 500 Index [8] - The stock is trading at a forward 12-month P/E of 10.50X, significantly lower than the Zacks Financial Transaction Services industry's 20.23X, indicating a cheap valuation [10] - The Zacks Consensus Estimate for full-year 2025 EPS has been revised upward, suggesting a 14.8% year-over-year increase [11]

Core Insights - PayPal, once a high-growth stock, is currently facing significant challenges as its stock price has dropped from a peak of $308.53 in July 2021 to around $78 [1][3] - The company has missed its long-term growth forecasts and is experiencing a slowdown in key metrics such as active accounts and total payment volume [3][7] Company Performance - PayPal's market capitalization is approximately $65 billion, with a current stock price of $69.27 [5] - The company had 434 million active accounts by the end of 2024, generating $31.8 billion in revenue and $6.6 billion in free cash flow for the year [7] - Year-over-year growth rates for active accounts, total payment volume, and revenue have all significantly declined since the pandemic [8] Management Changes and Strategy - Dan Schulman, the former CEO, set ambitious growth targets in early 2021, aiming to double active accounts and revenue by 2025, but these targets were abandoned in 2022 [6][7] - Alex Chriss, the new CEO, is focusing on stabilizing earnings growth by expanding operating margins rather than sacrificing margins for new account acquisition [10] Growth Initiatives - PayPal is enhancing its ecosystem with higher-margin features, including branded checkout tools and the "Pay with Venmo" initiative [11] - The company is also improving the shopping experience with a one-click "Fastlane" checkout service and integrating AI through a partnership with OpenAI [12] Financial Outlook - PayPal's adjusted operating margin expanded to 18.4% in 2024, with adjusted EPS growth of 21% [13] - For 2025, the company expects adjusted EPS to rise by 15%-16%, indicating a stable outlook despite the maturation of its business [14] - Analysts project a compound annual growth rate (CAGR) of 11% for adjusted EPS from 2024 to 2027 [14] Market Position - PayPal's stock is considered undervalued at less than 15 times the midpoint of its EPS forecast, but the company is transitioning from a growth stock to a value stock [15]

Financial Performance - Total Payment Volume (TPV) reached $417.208 billion, a 3% increase year-over-year, or 4% on an FX-Neutral basis[20] - Revenue totaled $7.791 billion, up 1% year-over-year, or 2% on an FX-Neutral basis[20] - Transaction Margin (TM$) grew by 7% to $3.716 billion[20] - TM$ excluding interest on customer balances also increased by 7% to $3.418 billion[20] - Non-GAAP EPS increased by 23% to $1.33[20] - Adjusted Free Cash Flow was $1.381 billion, a decrease of 26%[20] User Engagement - Active accounts increased by 2% to 436 million[22] - Monthly Active Accounts (MAA) also grew by 2% to 224 million[22] - The number of payment transactions decreased by 7% to 6.045 billion, but excluding PSP, transactions increased by 6% to 3.805 billion[22] - Transactions Per Active Account (TPA) decreased by 1% to 59.4, but excluding PSP, TPA increased by 4% to 35.2[22] Strategic Growth Drivers - Over 45% of US branded checkout traffic is now using the new checkout experience[11, 12] - Pay with Venmo TPV grew by over 50% in 1Q[12] - Venmo revenue growth accelerated to 20%[11] - Debit card TPV growth exceeded 60%[11]

Core Viewpoint - PayPal Holdings Inc. is facing a bearish trend indicated by a potential Death Cross, with analysts maintaining an optimistic long-term outlook despite recent stock struggles [1][3]. Technical Analysis - PayPal stock has declined 23.7% year to date and 5.7% in the past month, struggling below key moving averages, which reinforces a bearish trend [1]. - The Moving Average Convergence Divergence (MACD) indicator is at a negative 2.21, indicating further downside risk, while the Relative Strength Index (RSI) is at 32.09, approaching oversold territory [2]. Analyst Outlook - Mizuho maintains an Outperform rating with a price target of $96, citing growth potential in Pay with Venmo, which is expected to grow over 40% annually, potentially boosting overall transaction margin dollar growth [3]. - PayPal's valuation is at 17 times its estimated 2026 earnings per share, slightly above the median for legacy payments firms but below historical levels, with strategic initiatives justifying this premium [4]. Strategic Initiatives - PayPal is focusing on growth plans, including the appointment of Joy Chik from Microsoft to the Board, signaling a commitment to AI-driven innovation [5]. - The decision by Apple to open its NFC chip to third-party apps could enable PayPal to expand its tap-to-pay services, which may significantly impact mobile payments [5]. Future Prospects - Despite the current bearish trend, if PayPal's strategic initiatives gain traction, there is potential for the stock to recover and defy skeptics [6].