Please ensure Javascript is enabled for purposes of website accessibility

Is PayPal Stock a Buy?

By Danny Vena – Jun 16, 2020 at 3:14PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Even after 50% gains so far this year, this fintech pioneer still has plenty of room to run, says one analyst.

PayPal (PYPL -2.96%) has been one of the undisputed winners from the shift to e-commerce and digital payments that accompanied the stay-at-home orders and government mandated lockdowns. The payment processing giant has seen its stock jump more than 50% so far in 2019, but its run isn't over according to one analyst. 

Robert W. Baird analyst Colin Sebastian reiterated an outperform (buy) rating on PayPal, while ratcheting his price target to $175, up from its previous level of $153. Baird cited market share gains and encouraging new user and engagement trends.

A person sitting in a car holding a smartphone looking at the PayPal app homescreen.

Image source: PayPal.

"We also believe there is further upside potential to second-half of 2020 estimates if strong e-commerce share gains continue past June," Baird wrote in a note to clients.

Even after robust revenue growth in the first quarter, PayPal will still benefit from the paradigm shift that's occurring in both e-commerce and digital (and touchless) payments resulting from the COVID-19 pandemic. In fact, PayPal management provided evidence that it emerged from the bear market downturn stronger than ever.

In the wake of its first quarter earnings report, CEO Dan Schulman said, "I would argue that April was probably the strongest month for PayPal since we became a public company," as the fintech company set a monthly record for net new active accounts during April, up 140% from January and February levels. 

It didn't stop there, as the momentum carried into early May. PayPal revealed that May 1 was the largest transaction day in the company's history -- even surpassing the count from 2019's Black Friday and Cyber Monday. PayPal is also expecting to add a record 15 million to 20 million net new accounts in Q2, far surpassing the record 10 million it added in the first quarter. 

The evidence suggests that PayPal certainly is a buy.

Danny Vena owns shares of PayPal Holdings and has the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool owns shares of and recommends PayPal Holdings and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PayPal Holdings, Inc. Stock Quote
PayPal Holdings, Inc.
$86.07 (-2.96%) $-2.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.