To put it lightly, it's been a rollercoaster ride these past few years for PayPal (PYPL +0.48%) and its investors. After losing 30% of its value during the early stages of the COVID-19 pandemic, PayPal went on to surge over 255% from March 2020 to July 2021. Its stock is now down around 80% from that July peak.
Increased competition from companies like Apple, slowing sales post-pandemic after the initial surge, and diminishing margins are some of the factors that have contributed to much of PayPal's stock price troubles.
If you're a long-term investor, seeing your investment plummet like this isn't ideal, but it's also not the end of the world. At this point, the focus should be on PayPal's future and where it could be a decade from now. Nobody can say with 100% certainty, but the company's recent moves could give insight.
NASDAQ: PYPL
Key Data Points
From consumer-facing to enterprise
When it was founded in 1998, PayPal was simply a peer-to-peer payment platform. It's since become the world's leading online payment processor, with a 40.5% market share -- almost double that of the next closest competitor, Stripe, which has 20.5%.
Although it's a pioneer and market leader in online money transfers, PayPal has been slowly but surely building out a well-rounded financial ecosystem. That's included many products that offer enterprise solutions for companies of all sizes, from your local coffee shop to regional retail chains to corporations valued in the billions.
Strategic partnerships using its Braintree platform
PayPal's Braintree is an enterprise platform that allows companies to accept payments on their apps or websites with their own branding but using PayPal's technology.
Braintree also stores customers' payment information, handles recurring billing, processes refunds, adds fraud protection, and many other services that companies would rather outsource than try to build in-house. It's used by companies like Airbnb, Accenture, StubHub, Uber (UBER 1.03%), and countless others.
PayPal recently struck a multi-year deal with Uber to become more integrated and expand their partnership as Uber continues to scale globally. Uber has always used Braintree's payment processing, but the new deal expands it to include other services like instant driver payouts to PayPal and Venmo, rewards program integration, and ways to reduce chargebacks (which are costly for businesses).
The incoming CEO has experience with enterprise businesses
PayPal's current CEO, San Schulman -- who has been the CEO since PayPal split from eBay in 2015 -- has already announced his intentions to retire by the end of the year. The incoming CEO, Alex Chriss, was formerly Intuit's executive vice president and general manager of the small business and self-employed group.
Bringing in someone with experience working on the enterprise side of businesses makes sense for a company that is beginning to lean more on the enterprise side. There's a difference between growing a consumer-facing product and an enterprise-facing one.
That's not to say someone can't be good at both (there are plenty of instances of that being the case), but if a company is shifting its focus toward enterprise, it makes sense to bring in someone with expertise in that field.
Where will PayPal be in 10 years?
I believe PayPal's focus on its enterprise customers could be the catalyst it needs in this next chapter of its story. The past few years have been challenging, but the path is never completely smooth for any major company.
By continuing to build strategic partnerships, make acquisitions (it's made 26 so far), and build out its enterprise solutions, PayPal has the chance to be a multibagger in the next decade -- especially considering how low it's currently valued.
PYPL PS Ratio data by YCharts.
At its peak, PayPal's price-to-sales ratio was over 16. It's now down to around 2.3, the lowest it's ever been. Market sentiment toward PayPal is obviously not good right now, but it seems to be worth the long-term consideration for a company with its strong market presence and brand.
