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$PYPL dropped ~6%+ after its earnings call on Wednesday after hours.
The stock has been a poor investment recently, down 14% in the last five years, despite hitting an all-time high in 2021. PayPal is the original Fintech and should still have a long growth potential ahead. But the stock price in recent quarters tells a different story. What can we learn from its latest earnings report about its long-term potential? Read more on this thread. Interesting Stuff From PYPL's Earnings
PYPL's Revenue
Leading Indicators:
So, $PYPL is extracting more value from its current base. Why doesn't it grow its base? The mgmt. says it is intentional and is focusing on engaging the current base. Revenue grew 8%. Score: Fair to Good - Not a high-growth company anymore! PYPL's Bottom Line
Score: Fair to Good -- Directionally moving toward higher profitability. PYPL's Balance Sheet
~ $12B+ cash & cash equivalent
vs. ~$10B in total debt Strong cash held from customers' balances. Score: GOOD PYPL's Free Cash Flow
Impacted the fair value deduction of the BNPL loans being sold to KKR, the company took a $1.2B hit to its FCF.
It seems to be an excellent decision to avoid holding the loan balance on the balance sheet. PYPL is a solid free cash flow generator with a trailing 12-month FCF of ~$5B. Score: Good -- watch for other short-term impacts PYPL's Valuation
Because PYPL is a more mature company (profitable, FCF), using P/E is a good valuation indicator.
In this case, a Forward P/E of 15X is relatively undervalued. Even with the 3X P/S ratio, the stock isn't too expensive. To grow sales 3X in the next ten years, PYPL needs 12% annual rev growth. This is in the range of the overall market and PayPal's revenue growth. Score: FAIR to GOOD -- Watch for earnings and rev growth. Is PYPL A Buy Now?
The company's fundamentals remain strong, despite the stock price
The stock price could be a good buying opportunity. No expectation of crazy 5X - 10X growth potential I own it, and plan to hold it. See you next time!
$AMD jumped ~4% after its earnings call on Tuesday.
It all comes down to valuation and long-term potential. Read more on Twitter (X.com)'s thread.
META jumped ~8% after its earnings call on Wednesday. It's also up by 30% in the last three months.
Remember last year (2022) when META burned $13B+ on AI and VR (Reality Labs), and no one believed it could turn it around? Let's see if the billions of dollars invested on AI and VR are finally paying off and whether there is more room for META to grow. Read more on Twitter (X.com).
SNAP dropped ~20% after its earnings call on Tuesday.
Continue reading on Twitter (X.com) ...
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