Is PayPal Stock A Buy Right Now After Key Downgrade?

Fundamental Analysis of PayPal Stock: A Proven Track Record

PayPal boasts a consistent history of revenue and sales growth since at least 2010. It made only 29 cents per share that year. In 2019, the business recorded earnings per share of $2.96. Earnings per share for 2020 increased by 31% to $3.88. Experts predict that the company's earnings per share will increase by 21% in 2021 and another 25% in 2022.

The company's third-quarter results were released after the market closed on November 8th. On revenue of $6.18 billion, the business earned an adjusted $1.11 per share. PayPal also announced cooperation with Amazon (AMZN), allowing Venmo users to use the service as a checkout option on Amazon's platform. Experts predicted that the business will earn $1.07 per share on $6.23 billion in revenue.

PayPal's EPS Rating is a perfect 99 due to the company's fundamental strength. The EPS Rating assesses a corporation's capacity to increase earnings year over year by looking at the data from the past two quarters and earnings growth over the past three to five years.

At the same time, the SMR Rating emphasizes a company's revenues, profit margins, and return on equity. Such measures provide valuable information into a company's underlying strength. The SMR Rating is an A, owing to PayPal's recent double-digit revenue growth, 26% annual pretax profit, and 25% annual ROE in 2020.

PayPal stock has a poor 45 points out of a perfect 99 of IBD Composite Rating, according to the IBD Stock Checkup. The Composite Rating helps investors easily measure the fundamental and technical characteristics of a stock.

PayPal Stock News

In the crypto sector, PayPal is still competing with Square (SQ). The two payment services are promoting applications that allow customers to obtain discounts, pay in installments, and purchase cryptocurrency.

PayPal's Venmo and the Square Cash App began as one-to-one money-transfer services for family and friends. They've now developed into large-scale applications to provide financial services to consumers, spurring the development of these pioneers in the nascent digital payments segment.

PayPal introduced a cryptocurrency trading service in late 2020, allowing customers to buy and sell Bitcoin. Furthermore, PayPal customers can use cryptocurrencies to make purchases at 28 million merchants in its network, which began in 2021.

PayPal announced cryptocurrency on Venmo on April 20. Customers may now see crypto dynamics and conduct transactions using all three forms of cryptocurrencies, as well as Bitcoin Cash, thanks to the new tool.

On September 8, PayPal announced a $2.7 billion deal to acquire Paidly, a Japanese payment network for "buy now, pay later" financial plans.

On October 25, the business stated that it is not interested in acquiring Pinterest (PINS) at this time. PayPal had explored purchasing the firm for roughly $70 per share, according to Bloomberg.

Bernstein downgraded the stock from outperform to market perform on November 17 and reduced the target price from 260 to 220. In response, the stock fell more than 5%.

Is PYPL Stock A Buy Right Now?

According to IBD MarketSmith chart analysis, PayPal triggered the 7%-8% loss rule from its 296.11 buy price in a cup with handle during steep losses in August, meaning the stock is not a buy right now. There is no fresh buy point at this moment, with the stock trading around 40% below its 52-week high.

PayPal shares rose 0.2% on Friday, adding 0.35% to Wednesday's gains. The stock is at its lowest level since Nov. 16, 2020.