Payment processing leader PayPal (PYPL 0.51%) is now down by more than 60% from the highs after a disappointing growth forecast. But is now a good time for long-term investors to take a closer look? In this Fool Live video clip, recorded on Jan. 27, Fool.com contributors Matt Frankel, Jason Hall, and Lou Whiteman share their thoughts.
Matt Frankel: "Do you think PayPal is trading at an attractive valuation at about 30x price to earnings, or do you think interest rate tailwinds will cause further multiple contraction?" I could start. I think PayPal is a great value right now. I think PayPal is in the midst of a transition from being a growth stock to a value stock, like Apple (AAPL +1.18%) was a few years ago. I think it is a great value. I think it does have a lot of growth opportunity ahead of it. It's just not going to be the 40% revenue growth year over year. It's not really sustainable at its scale. But I think at a 30 price-to-earnings ratio, I think PayPal is definitely worth a look. I have a short list of about 25 stocks right now that I'm watching, and PayPal is definitely on there.
Jason Hall: I think five years from now, PayPal's price-to-earnings ratio is going to come down. I think we're going to see more compression of that come down from 30x because its growth is going to slow. But I think it's also going to make investors money over the next five years because it's going to grow fast enough that even if we do see that multiple come down because you know what, five years from now, interest rates are probably going to be a lot higher, borrowing some other major calamity that causes central banks to have to respond like we've seen. I think both of those things can be true, and PayPal's still be a rewarding investment over the next five years.
Lou Whiteman: I'll split hairs with your terminology, Matt, but only to split hairs. I think it's transitioning from a speculative to foundational, and that does affect the multiple that people assigned to it. I do think it's going if there's opportunities for continued growth. But we're through the ga-ga stage. I think the Apple analogy is good. I like this stock, I like it. I think this has become a "set it and forget it" almost kind of company, and I certainly like it better than Square/Block (SQ 0.59%) just because of what they have going. I think this is a good one, there's still some volatility.
