Best digital payment company Pay Pal (NASDAQ:PYPL) had a tough few months. Despite the increase in digital payments and a strong move towards digitalization, the PYPL share is not wowing investors.
The disappointing forecast frustrated investors, causing PayPal shares to drop significantly. Despite the new opportunities and the increased number of clients using the platform, PYPL’s stock has seen a steady decline.
The stock hit an all-time high of $ 310 in July and has been steadily declining. It has fallen 21% in the past year and 40% in the past six months. PayPal has gone from $ 302 in July to its current price of around $ 180. This is a huge buying opportunity that savvy investors should not miss out on.
Here are a few reasons why I think PYPL stock is a good addition to your portfolio.
Stablecoin could be interesting
The digital payments giant allows users to send and receive money, buy and invest in cryptocurrencies. Company profits did not go well due to the pandemic and it impacted valuation. But investors recognized the company’s potential and understood that the future is digital.
Consumers are shopping online, which has led to an increase in demand for digital payments. I think PayPal has products that will continue to be in demand. The future looks bright and management has proposed ambitious projections for the company.
The company has extended its offering to cryptocurrency trading, which is in the news recently. He recently confirmed that he is exploring the creation of his own stablecoin, which would be known as PayPal Coin. It would be a cryptocurrency attached to the reserve asset and which could be less volatile than other cryptocurrencies.
This is a big step forward for the company and it will be interesting to see how it works.
Increase in volume and transactions
The best way to judge PayPal’s business is to understand what lies at its core. It is a payments business and the total volume and transactions impact its profitability. Every time a user receives a payment, PayPal will charge a fee and this will increase revenue. Therefore, with an increase in the total volume of payments, the business will generate higher income.
For the third quarter, the total volume of payments amounted to $ 310 billion, an increase of 26% from the previous year. The company also saw an increase in the number of active accounts to 416 million, which means more users are using the platform. Management has set an 18% growth target for 2022 and expects to end the year with 430 million accounts.
The fourth quarter numbers will be important for the company and if it manages to register high revenue and user counts, PYPL’s stock will start to rise.
The end result on PYPL shares
The enormous opportunity offered by PayPal should not be ignored. As the company expands its offering with the launch of new products, it will only gain in value. The company is at a discount and PYPL stock may rebound after fourth quarter results.
PayPal strives to launch new products and meet user needs in every way possible. It also experienced tremendous growth through the buy now, pay later service which became a huge hit over the holiday season. The numbers will impact the bottom line and I’m sure the company will have an impressive fourth quarter revenue and cash flow report.
Do not judge the stock by the current decline or the new variant of Covid-19. Consider the long-term potential of the business. PYPL stock has huge growth potential throughout 2022. The stock’s current decline is a good opportunity to enter.
At the date of publication, Vandita Jadeja had (directly or indirectly) no position on the titles mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
Vandita Jadeja is a CPA and freelance financial writer who enjoys reading and writing about stocks. She believes in buying and holding for long term gains. His knowledge of words and numbers helps him write a clear stock market analysis.