The fintech company
PAYPAL
+1.79%
closure:0
opening:95.45
High:96.38
low:93.23
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It fell by 53% this year, a year of the harshness that PayPal had, which brought it back to the price it was at before the outbreak of the corona epidemic, this against the background of weaker than expected reports, and weaker forecasts than the company expected following a challenging macroeconomic situation and damage to consumer spending.
At the current pricing, a market value of 105 billion dollars and a projected earnings multiple of 23, and a fall of 53% in the year and a collapse of 70% from the peak, it is starting to interest many investors. Among them, Bank of America, which raises the stock rating from “hold” to “buy”, with a target price of $114 per share, an upside of 25% from the current price.
The company is adopting a new method, which more and more companies are adopting these days in light of the new desires of investors, less aggressive growth in revenues without profits, more focus on operational efficiency, generating profits and returning value to investors.
One of the good things that happened to PayPal in recent times, is the purchase of a part of the company’s shares by the “Elliott” investment fund. Elliott and the man behind it, Paul Singer, are known to be very active investors, very involved in what is happening, so that PayPal currently has an external “auditor”, who if he feels that something is not right, he will notify it, and of course take steps such as selling the shares. Elliott makes PayPal more efficient, it pushes it to cut costs and increase profitability, which is exactly what PayPal is starting to do, and the shareholders are starting to like it.
Bank of America stated regarding the Elliott Fund’s holding in the company’s shares: “We believe that the Elliott Investment Fund can help improve shareholder value in two main ways: first, striving for significant cost cutting and efficiency, second, increasing the return of value to shareholders, mainly through repurchases, and possibly Through dividend plots,” wrote Kupferber, a Bank of America analyst. And indeed it happens, in the company’s last investor call, the words “cost discipline” and operational efficiency were mentioned dozens of times.
In addition, the company announced in recent months a move to cut costs worth $900 million in 2022, and a larger cut of $1.3 billion in 2023. Not only that, in the latest financial reports, PayPal announced that it would buy back shares of the company worth $15 billion in the years the nearest It also means that PayPal believes the stock is now being shorted.
A Bank of America analyst believes that PayPal could post earnings per share of $5 in 2023, reflecting 27% growth from what analysts expect PayPal to earn per share in 2022. He thinks that PayPal’s marketing and advertising expenses are a “comfortable” place to cut costs without materially harming in the company’s revenues/profits.
In the last report PayPal published, it jumped 9% on the back of good results. It reported revenue of $6.81 billion compared to analysts’ expectations for revenue of $6.8 billion. In the corresponding quarter, the revenues were 6.2 billion dollars. Earnings per share were $0.93 compared to analysts’ expectations for earnings per share of 87 cents per share. down 26% from last year. Free cash flow was $1.3 billion, representing 19% of revenue, and reflecting 22% year-over-year growth.
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