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More analysts seem to be paying attention. PayPal (NASDAQ:PYPL) We have more in stock today than ever before.
Stocks have fallen considerably. PYPL stock is down 9% last year, 67% so far in 2022, and 25% over the past five years. Although there was a small rally in December, the long-term chart still looks bearish. So what’s behind the enthusiastic rise in PayPal stock?
The Optimist and PYPL Stock
Analysts are heading into 2024 with big smiles. They believe there will be a “soft landing” and a big boom in generative artificial intelligence will take the technology to new heights.
This also applies to PayPal.Alex Chris, former intuition (NASDAQ:INTU) The executive who became CEO this year says PayPal will replace passwords with passkeys that are easier to use.
This means easier checkout for consumers and a greater variety of payment options for small businesses. This process extends to tracking your shipment. In its latest earnings release, he said AI helped PayPal weed out “low-quality customers” in Latin America and Asia.
Bullish analysts are not worried about the decline in accounts. They call PYPL stock extremely cheap, with a price-to-earnings ratio of half that of its payments rivals. They expect the entire trading group to rise as the U.S. Federal Reserve looks to cut interest rates next year. The Bulls also like PayPal’s balance sheet and Chris’ new management team.
Next is Braintree. Venmo’s parent company, acquired in 2013, now accounts for 30% of PayPal’s payment volume. It was originally a way for merchants to accept payments on their mobile sites.
Now it’s at the heart of what Chris calls the “flywheel” of success. Data from Braintree provides insights to reduce fraud and increase approval rates, he says.
skeptics stay
There are still skeptics like our own David Mordell. Expectations should soften as 2024 becomes a transition year.
PayPal’s Venmo service has ended amazon.com (NASDAQ:AMZN) as a customer. The company is losing market share and e-commerce growth is slowing. Additionally, Braintree is not a brand, but a generic service that is easily competitive.
PayPal was founded in 1998 to reduce transaction costs with a system that bypasses gatekeepers such as: visa (New York Stock Exchange:V) and master Card (New York Stock Exchange:Ma).
Since then, subsidiaries such as Braintree have deeply integrated PayPal into the systems they once despised.When to use apple (NASDAQ:AAPL) pay or Google (NASDAQ:Google)(NASDAQ:google) payments, you are participating in a competitor of PayPal.
Next is cryptocurrency. PayPal has long had its own cryptocurrency wallet, which now includes its own branded stablecoin. Whether this is a good or bad thing depends on how you feel about cryptocurrencies.
Given the level of fraud in cryptocurrencies and the lack of compelling reasons to use them, I become skeptical. Regulators are similarly skeptical and are investigating stablecoins.
Conclusion on PYPL stock
PayPal stock has disappointed investors for years. Analysts keep hoping for a breakout, but it never takes hold.
Will anything be different this year? PayPal rose to more than $300 per share during the 2021 bull market. Despite the recent rally, it is still trading near five-year lows. Other stocks hit by the 2022 bear market have also recovered.
If PayPal scores as well as its competitors in payments, it’s a buy. But the names of those competitors are changing. The biggest story in payments today is the efforts of cloud emperors to disrupt it. That’s the big risk we see with his PayPal in 2024.
As of this writing, Dana Blankenhorn holds long positions in AMZN, AAPL, and GOOGL. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
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