PayPal Rises 35% in 6 Months: Is There Room for the Stock to Jump?

Core Viewpoint - PayPal's strong portfolio and expanding partner base are driving growth, with shares outperforming the market and a favorable valuation making it attractive for long-term investors [1][22]. Group 1: Financial Performance - PayPal shares have returned 35% over the past six months, outperforming the Zacks Computer and Technology sector's return of 9.7% and the Zacks Internet Software industry's appreciation of 34.2% [1]. - Total payment volume increased by 9% year over year to $422.641 billion in Q3 2024, on both a spot-rate and forex-neutral basis [2]. - Total active accounts grew by 1$3.7 billion, growing more than 8% on a reported basis, driven by higher interest income and improvements in branded checkout and tech-led risk/loss management [5]. - Earnings estimates for 2025 are projected at $4.91 per share, indicating a 7.13$33.07 billion, reflecting a 4.46% increase [20]. Group 2: Product and Service Innovations - The introduction of Fastlane enhances the guest checkout experience, with over 1,000 merchants adopting it since its launch in August [11]. - PayPal Complete Payments is expanding into new markets, including China and Hong Kong, targeting small and medium-sized businesses [12]. - The company has seen a 15% to 20% increase in Buy Now, Pay Later usage in the reported quarter, with plans to deploy new product experiences to more merchants in 2025 [6]. Group 3: Strategic Partnerships - PayPal's expanding partner base, including collaborations with Fiserv, Adyen, Amazon, Global Payments, and Shopify, is expected to enhance the adoption of its services [16]. - The partnership with Amazon will allow Prime members to link their accounts with PayPal for benefits while shopping [17]. - Collaborations with Apple and Google to integrate the Venmo debit card with their payment systems have added over 1 million first-time debit card users, with plans for further expansion in Europe [18]. Group 4: Market Position and Valuation - PayPal is trading at a forward 12-month P/E of 17.91X, significantly lower than the industry average of 38.64X, indicating a cheaper valuation [7]. - The stock is currently trading above its 50-day and 200-day moving averages, suggesting a bullish trend [9].