PayPal Stock Struggles from Pandemic Growth to Current Valuation

PayPal faces challenges as its stock price falls significantly from pandemic highs. The company's recent metrics show a slowdown in growth as they work on strategies for recovery.

Date: 18-03-2025

AI Rating: 4

PayPal's financial metrics reflect a significant downturn since its peak during the pandemic. **Earnings Per Share (EPS)** growth has dropped from a remarkable 85% in Q1 2021 to only 5% in Q4 2024. **Total Payment Volume Growth** also diminished from 50% year-over-year in Q1 2021 to just 7% in Q4 2024, highlighting a severe slowdown in transactions. Additionally, **Net New Active Accounts** growth fell from 14.5 million in Q1 2021 to only 2.6 million in Q4 2024, indicating a stagnation in user acquisition. Despite these challenges, management is implementing new strategies, including monetizing Venmo and launching an advertising platform, to spark future growth. They project achieving a 20% earnings growth rate in the long-term, which if realized, could present a significant investment opportunity. Currently, PayPal is regarded as undervalued at a trading price of 13.3 times forward earnings estimates and 11 times forward free cash flow, supported by strong cash flow generation projected at $6 billion in 2025, primarily earmarked for share buybacks. These factors suggest potential for recovery but underscore the risks associated with their current growth trajectory.

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