PayPal Holdings Stock: Is PYPL Underperforming the Financial Sector?
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Valued at a market cap of $68.2 billion, San Jose, California-based PayPal Holdings, Inc. (PYPL) is a leading global digital payment solutions provider, facilitating secure transactions for both consumers and merchants. The company's peer-to-peer payment service, Venmo, drives strong growth in total payment volume, while its PayPal and Xoom products support international person-to-person payments.
Companies worth more than $10 billion are generally labeled as “large-cap” stocks and PayPal fits this criterion perfectly. With operations in over 200 markets, PayPal enables transactions in multiple currencies and connects with financial service providers worldwide. Strategic acquisitions, including Braintree, iZettle, and Hyperwallet, have strengthened its payment offerings and enhanced the overall user experience.
Despite a 25.6% decline from its 52-week high of $93.66, shares of the technology platform and digital payments company have decreased 23.3% over the past three months, lagging behind the Financial Select Sector SPDR Fund’s (XLF) marginal drop over the same time frame.
In the longer term, PYPL stock is down 18.4% on a YTD basis, underperforming XLF’s 1.6% gain. In addition, PayPal shares have gained 10.8% over the past 52 weeks, compared to XLF’s 20.4% return over the same time frame.
PYPL has been trading below its 50-day moving average since February. Also, the stock has fallen below its 200-day moving average since late February.
Despite reporting better-than-expected Q4 2024 adjusted EPS of $1.19 and revenue of $8.4 billion, PayPal shares dropped 13.2% on Feb. 4 due to a 30 basis points year-over-year contraction in its non-GAAP operating margin to 18%. Investors were also disappointed by a 3% decline in total payment transactions, missing consensus estimates, signaling potential weakness in user engagement. Additionally, there was a modest 2% year-over-year growth in active accounts to 434 million missed expectations.
Lastly, the company's guidance, while positive, projected only low single-digit growth in non-transaction operating expenses and transaction margin growth of just 4% - 5%, fueling worries.
PayPal has lagged behind its rival, Visa Inc. (V), which saw a 5.9% increase on a YTD basis and an 18.2% gain over the past 52 weeks.
Despite PYPL’s underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from 41 analysts' coverage, and as of writing, PYPL is trading below the mean price target of $92.56.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.