Another round of upgrades for PYPL -- is it warranted?

July 5, 2024

PayPal (PYPL) trended this week after an analyst upgrade boosted investor sentiment. The upgrade was driven by PayPal's focus on improving margins through better pricing discipline in Braintree and efforts to expand PayPal Complete Payments for small and medium sized businesses.

Aside from improvement in execution, some argue the stock is oversold. PYPL shares are trading ~80% below pandemic highs and under 14x earnings. Meanwhile, the company is showing signs of a turnaround.

PayPal's active accounts increased by 2 million in Q1 2024 vs. the prior quarter, reversing a year-long declineUser engagement is rising, with total payment volume up 14% year-over-year and transactions per active account reaching an all-time high of 60.

What does LikeFolio data say?

A "turnaround" may be a bit overstated, but we do see signs of improvement. Consumer search data suggests queries for PayPal have plateaud but aren't quite growing yet. Venmo queries look better. PayPal web visits also show signs of flattening out, down -2% YoY. This is better than -14% a year ago. Translation: the bleeding is slowing down.

While improvement is good, PYPL is still underperforming peers including...

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