3. PayPal Holdings Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 90
PayPal Holdings Inc. (NASDAQ:PYPL) is a leading financial technology company that operates a robust online payment system and facilitates online money transfers across approximately 200 markets. It enables digital and mobile payments for consumers and merchants, making transactions easier and more secure. PayPal Holdings Inc. (NASDAQ:PYPL) is one of the best digital money stocks to invest in.
In the third quarter of 2024, PayPal Holdings Inc. (NASDAQ:PYPL) reported impressive financial results. Net revenues rose by 6% to $7.8 billion, while total payment volume increased by 9% to $422.6 billion. The company also saw a significant rise in GAAP operating income, which grew by 19% to $1.4 billion. These results indicate strong operational performance and effective management strategies.
Innovation is at the core of PayPal’s (NASDAQ:PYPL) growth strategy. The company has introduced new mobile checkout experiences designed to enhance conversion rates significantly. Over the past few quarters, the company completed testing over the past few quarters and is now rolling out new experiences to customers on both desktop and mobile. The new product experiences can lead to conversion lifts of over 100 basis points for vaulted checkouts and up to 400 basis points for one-time checkouts. Additionally, PayPal’s (NASDAQ:PYPL) “Buy Now, Pay Later” service has seen a usage increase of 15% to 20%.
With its focus on innovation and strong financial performance, PayPal Holdings Inc. (NASDAQ:PYPL) is well-positioned for future growth. These factors make PYPL an attractive investment opportunity in the digital payments sector.
Artisan Partners stated the following regarding PayPal Holdings Inc. (NASDAQ:PYPL) in its Q3 2024 investor letter:
“Our top contributor was PayPal Holdings Inc. (NASDAQ:PYPL), a financial technology company that enables digital and mobile payments between consumers and merchants. PayPal was a recent new purchase added to the portfolio in Q2. Better growth in payment volumes and transaction margins during PayPal’s latest quarter offered evidence that the new management team’s efforts are gaining traction. Notably, payment service provider Braintree returned to providing positive transaction margin, branded checkout contributed strongly to payment volume growth, and monetization at Venmo showed progress. Post-COVID, PayPal’s shares had been pressured by intensifying competition, the threat of which was seemingly exacerbated by prior management missteps. Shares traded for under 14X next year’s expected earnings at the time of our initial purchase. This was an attractive entry point to purchase a stake in a business with above-average—and improving—unit economics, a strong balance sheet and consistent free cash flow. Competent new management is already leaning on the company’s strong financial position to maximize the value of these assets.”
