PayPal Stock Is Up 34% From Its 5-Year Low. It's Time to Buy.

Core Viewpoint - PayPal has faced significant challenges over the past five years, with its stock down 35%, but recent performance indicates potential recovery under new CEO Alex Chriss [1][2]. Group 1: Stock Performance and Recovery - PayPal's stock has increased by 34% since reaching a five-year low on October 27, 2023, suggesting that the worst may be over for the company [1]. - Despite a dip following the Q4 2023 results announcement, the stock has recovered and even surpassed previous levels [2]. Group 2: Share Repurchase Program - PayPal initiated a $15 billion share repurchase program in June 2022, with$5 billion repurchased in 2023 at an average price of $67.57 [3]. - The company has$10.9 billion remaining in its repurchase program and typically allocates 70-80% of its free cash flow to buybacks, expecting $5 billion in free cash flow for 2024 [3][4]. - With$17.3 billion in cash and equivalents, PayPal is positioned to continue its repurchase strategy, which could yield significant returns if the stock price rises [4]. Group 3: Valuation and Market Position - PayPal is currently undervalued, trading at a forward price-to-earnings ratio of 11.5, significantly lower than competitors like Block [5][6]. - The company's revenue growth rate is higher than that of traditional banks, yet it is not reflected in its stock valuation [6]. - Despite disappointing earnings per share guidance of $5.10 for 2024, the current P/E ratio is much lower than its five-year average of 23.6, indicating potential for revaluation [6]. Group 4: Management and Future Outlook - New executive hires, including a Chief Marketing Officer with experience at successful companies, indicate a strategic shift under CEO Chriss [7]. - The company is viewed as a buy for patient investors, as it is not considered a value trap at current prices [7].