Friday, March 15, 2024
In her March 13, 2024, post, "PayPal Experiences a Significant 60% Decline in Annual Revenue Growth in the Last 3 Years," Stocklytics.com reporter Edith Muthoni acknowledged that PayPal Holdings has posted modest gains, crediting much of the turnaround to Alexx Chriss, who became CEO in September 2023.
"PayPal reported a commendable 9% year-over-year revenue growth and achieved a 9% reduction in non-transaction expenses," she wrote. "This translated into an impressive 18% year-over-year increase in earnings, underscoring the resilience of PayPal's business model."
Muthoni further noted that Chriss is positioning the company for growth by improving efficiencies at scale, expanding the company's checkout schemes and leveraging customer data.
Allen Kopelman, co-founder and CEO of Nationwide Payment Systems, suggested that PayPal's problems began in 2015, when the company was spun off by eBay, stating the initial euphoria was short-lived as challengers entered the market.
"Stripe and other payment providers began to offer more services to ecommerce companies and took business from PayPal," he said. "Amazon diluted the online marketplace concept that began with eBay and became a thriving global bazaar."
Ryan Vanzo, financial analyst at The Motley Fool, also noted that PayPal met fierce competition as an independent brand, detailing its rise, fall and potential comeback in "PayPal Stock Can Return to Rapid Growth With Killer New Features Like This," published Feb. 12, 2024.
"The company went on a buying spree, purchasing Honey, a coupon discovery browser plug-in, for $4 billion in 2020, while taking full ownership over China's GoPay app that same year," he wrote, reporting that PayPal share prices doubled in 2020. These gains, he noted, were given back the following year when eBay didn't renew a five-year contract that made PayPal its primary payment processor. These headwinds have made the company's stock price a bargain for the first time in years, Vanzo stated, adding that he is not betting against the company.
"PayPal shares, once a ticket to rapid growth, are now cheaper than the market," Vanzo wrote. "Investors just aren't willing to believe in PayPal's long-term growth prospects, but there's reason to believe a turnaround could be just around the corner."
Vanzo proposed that PayPal's near-term product, Fastlane, will accelerate the company's recovery. The verification solution is designed to improve conversion rates by enabling buyers to checkout without entering a username, password or additional information, reducing checkout times by 40 percent.
"Why is Fastlane such a killer feature?" Vanzo wrote. "Across the highly competitive e-commerce world, efficiencies matter. Amazon once estimated that a one-second increase in page load speeds would cost it $1.6 billion in annual sales."
Experts agree that PayPal's generally positive outlook may have broad implications for Main Street and Wall Street. With PayPal stock trading at under nineteen times earnings, the company is poised for a comeback, buoyed by strong leaders and innovative products. 
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