7. PayPal Holdings Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 90
One of the Best Financial Stocks, PayPal Holdings, Inc. (NASDAQ:PYPL), which specializes in online transactions, was separated from eBay in 2015 and offers electronic payment options to both individuals and businesses. By the end of 2023, the firm had 426 million active accounts. Additionally, the company owns the person-to-person payment network Venmo.
PayPal Holdings, Inc. (NASDAQ:PYPL) was able to establish and preserve a competitive edge by building a network of merchants and customers early in the development of e-commerce. In the past, the firm’s expansion has been pushed by the continuous transition to electronic payments and the emergence of e-commerce, which the coronavirus pandemic momentarily worsened. More recently, however, the company has faced significant challenges as the benefits of the pandemic have reversed and new competitors have emerged. In an effort to ease the strain on top-line growth, management has put more of an emphasis on cost reduction and product innovation, with the ultimate goal of moving toward more profitable growth.
In the third quarter of 2024, PayPal Holdings, Inc. (NASDAQ:PYPL)’s net revenues jumped by 6% YoY to $7.8 billion, fueled by an increase in transaction volume and profit growth. Payment transactions rose by 6% to $6.6 billion, while the overall payment volume surged by 9% to $422.6 billion. The operating cash flow grew by 28.20% year over year. Additionally, PayPal repurchased shares, returning $1.8 billion to stockholders.
James Faucette, an analyst at Morgan Stanley, increased his price objective for PayPal Holdings, Inc. (NASDAQ:PYPL) from $76 to $90. According to the firm’s 2025 forecast statement, its attractive payments and processing industry assessment is based on better investor optimism, young consumer preferences, a call for further investment in competitive strengths, more M&A, and reduced regulatory scrutiny.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the company among the funds in Insider Monkey’s database. It owns 9.06 million shares worth $707.21 million as of Q3.
Artisan Value Fund 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.”