Why is PayPal Stock so Cheap?

Consumers probably prefer specialized companies that came first.

Andrew Willis 16 December, 2022 | 6:45AM
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Andrew Willis: Diversified tech giants Google (GOOG), Apple (AAPL) and Alibaba (BABA) have all gotten into the payment processing game, so how will the relatively small fish, PayPal (PYPL), stand a chance at surviving as a common digital wallet?

For one, PayPal users don’t seem to want to switch. In fact, transaction volumes per account grew 13% year over year in Q3, and senior equity analyst Brett Horn thinks the company’s pivot to drive increased usage among existing users makes sense.

We think PayPal will remain a preferred partner in the online world given its convenience and security, with its offering on both the consumer and merchant side of transactions. Management did suggest it is taking a more cautious outlook on the macro environment and lowered its revenue expectations for next year – not long before we had a record-breaking Black Friday.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alibaba Group Holding Ltd ADR77.11 USD2.44Rating
Alphabet Inc Class C183.79 USD2.45Rating
Apple Inc225.09 USD0.35Rating
PayPal Holdings Inc60.41 USD1.81Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar.ca. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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