PYPL
PayPal Holdings Inc
Finance/Real Estate, TMT
06/22/2020
Presented
| Date | 06/17/2020 |
| Price | $163.83 |
| Market Cap | $192.36B |
| Ent Value | $112.01B |
| P/E Ratio | 103.68x |
| Book Value | $13.61 |
| Div Yield | 0% |
| Shares O/S | 1,174.16M |
| Ave Daily Vol | 9,628,209 |
| Short Int | 1.17% |
Current
| Price | $79.55 |
| Market Cap | $81.33B |
| PayPal Holdings, Inc. engages in the development of technology platform for digital payments. Its solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and Paydiant products. The firm manages a two-sided proprietary global technology platform that links customers, which consist of both merchants and consumers, to facilitate the processing of payment transactions. It allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. The firm also enables consumers to exchange funds with merchants using funding sources, which include bank account, PayPal account balance, PayPal Credit account, credit and debit card or other stored value products. It offers consumers person-to-person payment solutions through its PayPal Website and mobile application, Venmo and Xoom. The company was founded in December 1998 and is headquartered in San Jose, CA. |
Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), eBay Inc (EBAY), PayPal Holdings Inc (PYPL), Synchrony Financial (SYF), Visa Inc (V)
Highlights
The presenter is long shares of PayPal Holdings Inc (PYPL), which operates a two-sided payment network that is directly benefiting from the massive secular transition of cash to digital and brick and mortar retail to e-commerce. Although these dynamics have been in motion for a while, the COVID-19 pandemic has resulted in consumers staying at home, ordering more online, and reducing in-person interaction/ use of cash. According to the presenter, this has brought the company to the largest business inflection in its history centered around accelerations in account growth, engagement, ubiquity, and more recently, expansion into the offline world. Generally speaking, sell-side analysts model a gradual shift from cash payments to digital payments over the next 20 years. Yet, the presenter believes that the COVID-19 tailwind could compress this timeline meaningfully, allowing digital to take the same amount of share in fewer than 5 years and accelerating PYPL’s fundamentals materially. He therefore estimates 2022 EPS of $7 (vs. $5.02 consensus) and continued EPS growth of >20% annually thereafter. Over the next 12 months, he sees ~50% upside with incremental optionality based on multiple expansion.
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