Here’s Why Baron Funds Reduced its PayPal (PYPL) Stake

Baron Funds, an asset management firm, published its “Baron Fintech Fund” first-quarter 2022 investor letter – a copy of which can be downloaded here. In the quarter ended March 31, 2022, Baron FinTech Fund (the “Fund”) fell 16.67% (Institutional Shares) compared with a 4.60% decline for the S&P 500 Index (the “Benchmark”) and a 12.78% decline for the FactSet Global FinTech Index. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022. 

In its Q1 2022 investor letter, Baron Fintech Fund mentioned PayPal Holdings, Inc. (NASDAQ:PYPL) and explained its insights for the company. Founded in 1998, PayPal Holdings, Inc. (NASDAQ:PYPL) is a San Jose, California-based multinational financial technology company with a $92.9 billion market capitalization. PayPal Holdings, Inc. (NASDAQ:PYPL) delivered a -57.95% return since the beginning of the year, while its 12-month returns are down by -70.79%. The stock closed at $79.30 per share on June 10, 2022.

Here is what Baron Fintech Fund has to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q1 2022 investor letter:

“PayPal Holdings, Inc. enables digital payments for consumers and merchants worldwide. Shares fell on disappointing 2022 guidance that called for 15% to 17% revenue growth but flat EPS growth due to higher credit costs and a higher tax rate. Management also tempered user growth expectations due to a strategic shift toward improving engagement of existing users and away from less-productive new user acquisition. Despite reduced earnings expectations, we believe the share price decline is overdone given PayPal’s growth opportunities and competitive advantages. We reduced PayPal Holdings, Inc.as it became clear that strong growth trends during the early part of the pandemic were not persisting in a more normal environment.”

Our calculations show that PayPal Holdings, Inc. (NASDAQ:PYPL) ranks 18th on our list of the 30 Most Popular Stocks Among Hedge Funds. PayPal Holdings, Inc. (NASDAQ:PYPL) was in 100 hedge fund portfolios at the end of the first quarter of 2022, compared to 110 funds in the previous quarter. PayPal Holdings, Inc. (NASDAQ:PYPL) delivered a -17.88% return in the past 3 months.

In May 2022, we also shared another hedge fund’s views on PayPal Holdings, Inc. (NASDAQ:PYPL) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.