PayPal PYPL is still in stage #4. It was morphing into stage #1 but failed and resumed its downtrend. It is trading below its 2025 fair value providing an opportunity for 8% annualized growth at the current price. The price action speaks for a probability of a further decline so if you are interested in this stock (which in my opinion is still an innovative payment processor compared to others or traditional banks) any share buying needs to be done gradually at the current prices. I do not expect the stock to go lower as it is evidently bottoming. It may stay here for a long time. And if you buy now, be prepared for a slow movement up or even further decline.

 

 

The company shows growing revenue despite troubles and a recent decline. The revenue (6.72% annual average, and 14.55% 5-year average) was higher in 2022 than in 2021 so the selloff in 2022 seems to be an overreaction:

 

 

The free cash flow is steady with no growth but steady. We would prefer some growth in this metric. Even a small growth would be appreciated and it would provide some boost for the stock price movement. PYPL recently replaced their CEO, so let’s hope that move will be for the better and the company improves its finances which would translate to better stock valuation:

 

 

The company increased its cash substantially last year which could retire its entire debt. I think this is a very positive balance and something investors are not appreciating enough:

 

 

 

Fundamentally, the stock is trading above its fair value, but below its future fair value (see the red line in the chart above). At the current price, and if the earnings estimates remain at the current level, the stock may offer 9% growth in two years. And if it sparks a FOMO, it may be even better. I think the stock is a good long-term investment.

 

 

The stock is now BUY
 

This post was published in our newsletter to our subscribers on Saturday, February 18th, 2023. If you want to learn more about our stock technical analysis subscribe to our weekly newsletter.