PayPal Stocks: Buy, Sell or Hold?

Shareholders in PayPal (PYPL -0.37%) he can finally breathe easy again. Fintech has a new leader, a new direction and a new stock on the rise.

But as the company comes back together, is it worth it for new investors to take a chance on PayPal? Or are the glory days over? Let’s check.

Shop: PayPal has incredible assets

PayPal is the dominant digital payments company serving both sides of the shopping equation with a wide range of individual services as well as a competitive merchant business. Although it was pressured by new competition, no other company was able to take its top position in the industry.

Under new CEO Alex Chriss, the company has made changes to clarify its focus and create an improved user experience.

It’s still growing at healthy rates, and this has remained fairly steady even as the stock has declined. Revenue grew 9% year over year in the second quarter and total payment volume (TPV) increased 11%. It processed $1.6 trillion in POS in the last 12 months.

PayPal has 429 million active users and transaction rates continue to grow at robust levels. It also has tailwinds in a growing e-commerce market that is valued at $6 trillion and could get a boost this week from interest rate cuts.

Profitability, which has been a major issue for some time, is also improving. The company generates the most growth through Braintree, its unbranded online home business. Operating margin rose 2.3 percentage points in the second quarter to 18.5%, and adjusted earnings per share (EPS) rose 36% to $1.19.

Sell: There are younger stocks with more potential

PayPal may still have a great name and turnaround potential, but younger companies have emerged with more opportunities and more agile systems. PayPal has just announced the expansion of its partnership with the e-commerce platform company Shopifybut although they work together, they compete in certain areas, such as business solutions. There are many interesting and well-established companies that find loopholes in PayPal’s platform, such as Blockwhich has popular merchants and digital payment services.

Even some established fintechs like Visa they look like better buys for their consistency and reliability as well as their dividend payouts.

When there are more reliable options or stocks with higher growth potential, some investors see no reason to stick with PayPal and its potential recovery.

Hold: Do nothing until things are clearer

There are risks in such cases. While the situation seems to be improving and there is something to be excited about, it is not yet clear that PayPal can pull it off.

If you already own PayPal stock, it doesn’t sound like you should sell right away before it goes down – that’s already happened. If you bought it a while ago, it may still come back. There are many amazing stocks that lost a large percentage of their value before climbing to new heights. Even Nvidia it lost half its value in 2022 before crushing the market this year. Staying the course is an important part of long-term investing.

Of course, your investment thesis can change as a company changes, and you don’t have to get your money back like you lost it. But because PayPal could still make a huge comeback, and its trajectory looks good so far, you might want to wait and see what happens.

What should you do?

There are legitimate reasons to go with any of the above moves. A lot of it comes down to what kind of investor you are or what you’re looking for right now. Growth investors might look elsewhere, while investors focused on the set-and-forget investment approach might hold out. Value investors may be interested in taking a position at a low price.

I’d recommend holding on right now and seeing how things go. But if you have some risk tolerance and want to make a lot of money, there’s reason to be confident.