Given its already considerable size, is no more feasible for PayPal to keep expanding at double digits rates for prolonged periods. Major e-commerce platforms revenues y-o-y growth rate (Personal Data) If we have a look at the revenue growth rates of the major e-commerce platforms, in 2022, the median growth rate was 18.9%, a respectable rate, but the lowest value registered since 2015. PayPal itself was already the dominant player in the digital payment industry before the pandemic, with the latest only helping to strengthen its position in the market. However, even without the boost given by lockdowns, e-commerce and digital payments were already well-established concepts in people's everyday lives, and while they couldn’t be described as mature industries, neither they could be considered youngsters. After the outbreak of the covid pandemic in 2020, the already flourishing e-commerce industry boomed, and not surprisingly, digital payments closely followed the same growth pathway.
PayPal revenues, generated by offering digital payment processing services and digital checkout solutions to merchants and customers all around the globe, are strictly related to the state of the e-commerce industry. With a CAGR of 17.13% since 2012, PayPal grew its revenues from $5.6 billion to $27.5 billion in 2022, however, while projecting PayPal future performances I assumed the revenues growth rate to remain around 9% in 2023 and to slowly decline in the following years, as PayPal become a mature company, until reaching the economy growth rate represented by the US 10-year Treasury Bond yield.īut how is it possible that PayPal, which historically registered solid double digits growth rates, is expected to deliver “poor” single-digit growth in the following years?
PayPal era of strong growth seems long gone, registering a mere revenues growth rate of 8.5% in 2022, and 9% in the first quarter of 2023. In today’s analysis, we will assess why PayPal can represent a good investment opportunity as the company shifts from a strategy focused on user growth to a strategy more focused on increasing efficiency and profitability. After five consecutive quarters in which PayPal ( NASDAQ: PYPL) registered single digits revenues growth rates, it seems the company has lost its growth momentum, and the market, which was used to price PayPal’s stocks based on its strong growth, doesn’t seem to have taken the news very well, with PayPal stock price being down 80% since its peak of 2021, when the pandemic-induced explosion of online shopping, made the market think PayPal would have been able to growth at double digits rates forever.īut despite the market punishing PayPal for its poor growth performances, we long-term investors should start looking at PayPal no more as a growth stock but rather as a value stock.
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