PayPal stock price has bounced back this month as American equities rebound, following its first-quarter financial results. The PYPL share price rose to $68 on Tuesday, its highest level since March 27, and up by 21% above its lowest level this year. This article explores whether it is safe to buy or sell PayPal shares.
PayPal earnings download
The PayPal stock price has done well, helped by the company’s financial results. Numbers revealed that its revenue rose by 1% to $7.8 billion, higher than the median estimate of $7.4 billion.
This growth happened after the total payment volume rose by 3% in the quarter to $417 billion. The transaction margin rose to $3.71 billion as the company’s profits continued growing.
PayPal also had more users during the quarter as its active accounts and monthly active accounts rose by 2% to 436 million and 224 million, respectively. However, the number of payment transactions dropped by 7% during the quarter to 6 billion as its Braintree business slowed.
These numbers reflected the fact that PayPal is no longer the growth engine it was a few years ago. Also, they showed that some of the initiatives the company has made in the past few years are not supercharging its growth.
A good example of this is its PayPal USD (PYUSD) stablecoin, which aims to be a leading player in the payments industry. PYUSD’s market cap stands at $873 million, making it the tenth-biggest stablecoin in crypto. It crossed the key milestone at $1 billion briefly last year and then lost market share as competition intensified.
PayPal also introduced Fastlane, a solution that helps to streamline online purchases. Fastlane has partnered with companies like Salesforce, Adyen, BigCommerce, and Global Payments Inc. It has not helped the company to gain market share in the payment industry.
Read more: PayPal stock price forecast: why PYPL is crashing, and what next
Growth and valuation
Analysts don’t see PayPal having any substantial growth in the future. The average estimate is that its revenue will be $8.08 billion in the second quarter, a 2.5% increase from what it made a year earlier. The most optimistic analyst sees its revenue rising to $8.22 billion.
The company’s annual revenue is expected to be $32.69 billion in 2025 and $34.74 billion next year. These numbers will represent a growth rate of 2.8% and 6.28%, respectively.
These growth expectations have made it an undervalued company as its price-to-earnings multiple stands at 15, lower than the S&P 500 Index average of 20. The forward P/E ratio is 13, much lower than the five-year average of 29.
This valuation explains why analysts expect that the PayPal share price will rise to $82.32, up from the current $68.
PayPal is doing some measures to boost its stock price, including its share repurchases that have reduced the outstanding shares to 979 million, down from the 2022 high of 1.14 billion.
PayPal stock price analysis
The daily chart shows that the PYPL share price has bounced back from the April low of $55 to $67 today. This recovery mirrored the performance of the broader stock market.
The decline is also part of the formation of the handle section of the cup and handle pattern. It also moved below the 100-day Exponential Moving Average (EMA).
Therefore, the stock will likely remain under pressure as it remains below the key point at $70.59, the highest swing in April 2024. This price is also notable because it also coincided with the 100-day EMA.
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