$PYPL ~ Looking for further upside once correction complete...
We like PayPal at these prices... Chart looks nice and appears to be setting up for some nice moves...
Appears Wave 1 is in and Wave 2 in progress...
Let's track closely...
Business Strategy and Outlook
PayPal’s development of a network of both merchants and consumers early in the evolution of e-commerce allowed the company to build and maintain an enviable competitive position. In recent years, PayPal’s growth has remained turbocharged by the ongoing shift toward electronic payments and the rise of e-commerce, and the coronavirus further accelerated the shift toward e-commerce. Management previously set a target of 20% annual top-line growth over the next five years. However, the company may see some headwinds this year.
Longer term, though, the picture is less certain, and we see a mix of competitive opportunities and threats that create a fairly wide range of outcomes. PayPal remains a somewhat unique player within the payments space. We think this remains its key strength, but its position on both the merchant and consumer side could be challenged over the long run. Traditional point-of-sale acquirers are building out their online capabilities, and, in our view, it is notable that the commonality in the wave of M&A in 2019 was the combination of acquirer and issuer operations. This suggests to us that competitors are interested in replicating the PayPal model. Fintech innovation also appears to be concentrated in the e-commerce space, which has given rise to some new competitors. On the consumer side, services such as Apple Pay represent competition for PayPal. Competition on both sides could chip away at PayPal’s position. On the other hand, PayPal remains a preferred partner in the online space, and could leverage this into a growing presence in point-of-sale transactions. In balance, we think the company can hold its own, but we recognize the potential to veer in either direction.
An additional attraction is the rapid growth Venmo and other peer-to-peer platforms are experiencing. Efforts to monetize the platform are in still in the early stages. although PayPal expects this business to generate almost $900 million in revenue in 2021 (about 4% of expected revenue). Venmo will likely not be a major driver anytime soon and its future is difficult to predict, but it has potential to create upside above our fair value estimate.
Appears Wave 1 is in and Wave 2 in progress...
Let's track closely...
Business Strategy and Outlook
PayPal’s development of a network of both merchants and consumers early in the evolution of e-commerce allowed the company to build and maintain an enviable competitive position. In recent years, PayPal’s growth has remained turbocharged by the ongoing shift toward electronic payments and the rise of e-commerce, and the coronavirus further accelerated the shift toward e-commerce. Management previously set a target of 20% annual top-line growth over the next five years. However, the company may see some headwinds this year.
Longer term, though, the picture is less certain, and we see a mix of competitive opportunities and threats that create a fairly wide range of outcomes. PayPal remains a somewhat unique player within the payments space. We think this remains its key strength, but its position on both the merchant and consumer side could be challenged over the long run. Traditional point-of-sale acquirers are building out their online capabilities, and, in our view, it is notable that the commonality in the wave of M&A in 2019 was the combination of acquirer and issuer operations. This suggests to us that competitors are interested in replicating the PayPal model. Fintech innovation also appears to be concentrated in the e-commerce space, which has given rise to some new competitors. On the consumer side, services such as Apple Pay represent competition for PayPal. Competition on both sides could chip away at PayPal’s position. On the other hand, PayPal remains a preferred partner in the online space, and could leverage this into a growing presence in point-of-sale transactions. In balance, we think the company can hold its own, but we recognize the potential to veer in either direction.
An additional attraction is the rapid growth Venmo and other peer-to-peer platforms are experiencing. Efforts to monetize the platform are in still in the early stages. although PayPal expects this business to generate almost $900 million in revenue in 2021 (about 4% of expected revenue). Venmo will likely not be a major driver anytime soon and its future is difficult to predict, but it has potential to create upside above our fair value estimate.