Only now we don’t know if the low will be around $68 or if it will take a deeper flush, like down to $50.Ī decade is a long time to wait.
Now back below the Covid-19 low - which in 2020 was irrational pessimism - it “feels” like we’re there again. When PYPL stock was above $300 in 2021, it was clearly upside exuberance. When we navigate bulls and bear markets, we don’t know what’s irrational until after the fact. Is that a perfect roadmap? No, but for a quality company and enough time, one can see how it’s more than possible. And at 20 times earnings, that gets $300 a share. I don’t know what the next decade brings - no one does.Ĭan PayPal go from $7 a share in 2025 to $15 a share in 2032? That seems reasonable. In that sense, 19 times to 25 times earnings - even if PayPal does have a slower growth rate - would be reasonable.Ģ5 times and $7 a share gets us $175 for PYPL stock, a 150% return. In bull markets, multiples expand, they don’t contract. To that I would counter: PayPal very well could earn $7 a share and by 2025, I expect to be back in a regular market or a bull market. The main three issues with this back-of-the-envelope calculation are: If we apply today’s multiple (19x) to 2025, that gets us ~$135 a share - roughly a double from current levels. In 2025, estimates call for more than $7 a share in earnings. How We Get a 4-Bagger From HereĪll of this boils down to one simple question: How does PYPL stock rally 300%-plus from here?
#Call paypal free#
That’s especially as it has been free cash flowing $5 billion to $5.5 billion a year and has more than $50 billion in current assets. PayPal’s business is not perfect, but it’s not in free-fall like the stock price would suggest.Īt these prices, PYPL stock is certainly worth a consideration. Valuations don’t limit stocks in raging bull markets and they don’t support stocks in painful bear markets.īut at some point - and this goes for Advanced Micro Devices (NASDAQ: AMD), Salesforce (NYSE: CRM) and others - we have to assess the businesses and not the stocks. While I believe that PayPal is cheap, remember that there’s no “magic valuation floor.” Meaning there’s no special P/E or P/S ratio - or any other metric - that will suddenly indicate that the stock can no longer decline. But that’s also what happens when a bear market comes along and a company is cutting its forecasts. On a forward and trailing basis, PYPL stock has never traded at such a low price-to-earnings or price-to-sales basis. On a revenue basis, shares trade at 3 times this year’s sales. Based on estimates for 2023, it trades at just 19 times earnings. PYPL Stock Is Now Value, Not GrowthĪt present value, PYPL stock trades at just 19 times this year’s earnings. But the point remains the same: PayPal still has solid growth potential. The caveat is, these are just estimates and prone to changes.
However, from there analysts expect 24% growth in 2023, then 21% growth in both 20. Consensus estimates call for an earnings dip of 16% this year to $3.87 a share. On the earnings front, it’s a little muddier. In 20, estimates sit at 15.5% and 13.8%, respectively. Investors are likely nervous ahead of PayPal’s Q2 results and guidance.ĭespite the selloff and the recent disappointment, though PayPal still has decent growth.Īnalysts expect 11.5% revenue growth this year, but 16% growth in 2023. When it reported its Q1 results, it had in-line earnings, but again provided weak Q2 and full-year guidance. Worse, it provided weak Q1 and full-year guidance. When the company reported its fourth-quarter results, it missed on earnings estimates.
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