5 Out of Favor Stocks That Hedge Funds Love

2. Paypal Holdings, Inc. (NASDAQ:PYPL)

Two-year performance: -77.3%

Number of Hedge Fund Holders: 103

Paypal Holdings, Inc. (NASDAQ:PYPL) is a transaction and payment processing services company. It is based in San Jose, California.

Paypal Holdings, Inc. (NASDAQ:PYPL) had 103 hedge funds long its stock during the first quarter. Their total stake value was $3.7 billion.

On July 6, Kevin Barket at Piper Sandler maintained a Neutral rating on Paypal Holdings, Inc. (NASDAQ:PYPL) shares, alongside an $80 price target.

Here’s what Manole Capital Management said about Paypal Holdings, Inc. (NASDAQ:PYPL) in its second-quarter 2023 investor letter:

“For our purposes, we are just going to focus on software digital wallets, as they are much more common and accessible. If you own an iPhone, then you have an Apple Pay pre-loaded digital wallet. If you have a Samsung phone, you have Samsung Pay available for use. Those two, along with Google Pay and PayPal Holdings, Inc. (NASDAQ:PYPL), are the four most popular digital wallets today. According to the Payments Journal, PayPal has been used (over the last 12 months) by 62% of American consumers, followed by Apple Pay at 41% and Google Pay at 32%

Over the last several years, P2P payments have made tremendous strides in adoption and usage. Whenever something becomes a verb, like just Venmo me $10, you know that it has been widely embraced by society. The concept of allowing individuals to pay each other, via our smartphones, has clearly taken off.

However, the biggest flaw or issue (that we’ve identified) is interoperability. Digital wallets allow users to pick their favorite card to make payments with. P2P acts as a bit of a “walled garden” and its funding source is still siloed. This is a critical aspect for future P2P growth, as Venmo users can’t pay Cash App users who can’t pay Zelle users. Visa is launching Visa+ next year and it has already signed up PayPal and Venmo as its initial customer. The global card networks seem like the perfect piece to solve this interoperability puzzle. Of course, this will only work if banks allow an independent network to serve as the gateway between disparate user bases…” (Click here to read the full text)