4. PayPal Holdings Inc (NASDAQ:PYPL)
Number of Hedge Fund Investors: 82
Talking about PayPal Holdings Inc (NASDAQ:PYPL) in a latest program, Cramer said he has found new faith in the company since the arrival of new CEO Alex Chriss.
“I know there is a lot of competition, but this man, this gentleman seems he really knows what he’s doing.”
Cramer recommended PayPal Holdings Inc (NASDAQ:PYPL) investors to hold on to the stock, but told them not to buy more shares until they see “better numbers.”
New Street Research recently started covering PayPal Holdings Inc (NASDAQ:PYPL) with a Buy rating, citing the company’s shift to value from price and its ability to better leverage advantages it has on both consumer and merchant fronts over competitors.
New Street’s analyst Soomit Datta called 2024 a “transition year,” adding they expect more “news and supportive KPIs on new initiatives” before monetization comes through more in 2025.
PayPal Holdings Inc (NASDAQ:PYPL) shares have been hammered over the past one year, having lost 14%, as new competition and growth concerns keep investors at bay. While PayPal earnings have seen declines, the company managed to grow its revenue YoY in high single digits. Analysts think the company’s new features and products including an increased focus on unbranded checkouts, smart receipts, launch of stablecoin PayPal USD, expansion of Venmo, in addition to its push into digital ads business would help the stock in the near future.
PayPal Holdings Inc (NASDAQ:PYPL) bulls believe the stock’s valuation has become attractive. It forward P/E ratio of 14 is now 55% lower than its five-year average. Wall Street analysts expect PayPal Holdings Inc (NASDAQ:PYPL) earnings to grow 11.2% next year. If we incorporate PayPal new product growth strategy and catalysts, the stock looks undervalued. PayPal Holdings Inc’s (NASDAQ:PYPL) cash sits at about $14 billion, and long-term debt stands at only $9 billion.
Polen Focus Growth Strategy stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its first quarter 2024 investor letter:
“We eliminated our PayPal Holdings, Inc. (NASDAQ:PYPL) position after a frustrating holding period. PayPal is the largest digital wallet company in the world, with 400 million users and 35 million merchants, but it has been losing market share over the last 18 months as management has been very slow to innovate and bring a true one-touch checkout experience to its customers. Friction in the checkout experience can be annoying to buyers and financially problematic for merchants, leaving lost sales on the table. Apple Pay (and others) has been winning market share from PayPal as it is a true one-touch checkout experience and is highly integrated into iPhones. We believed that PayPal had finally upgraded its technology last summer and should have been able to deploy it to their merchant customers quickly.”
