Sexy Biotech (sexybiotech.com)
PayPal is a powerhouse in the fintech space. Its arsenal of products includes omnichannel commerce software and payment processing services for merchants, as well as a suite of mobile apps and shopping tools for consumers. More importantly, the company has built a reputable brand, and it has become a key enabler of e-commerce. In fact, over 75% of the largest 1,500 businesses offer PayPal at checkout, making it the world’s most accepted digital wallet.
To maintain that edge, PayPal has rolled out a number of new products in recent years, including crypto brokerage services, QR Code payments, and “buy now, pay later.” The company has also expanded partnerships with key players in the commerce industry, bringing its digital wallet to Roku, Salesforce, and Instacart. Additionally, Venmo recently launched on Booking Holdings’ travel marketplace, and it’s set to go live on Amazon sometime this year. Those moves have helped the company grow and engage its user base.
In 2021 PayPal reached 426 million active accounts, up 13%, and transactions per active account hit 45.4, up 11%. In turn, total payment volume (TPV) soared 33% to $1.2 trillion, revenue jumped 18% to $25.4 billion, and free cash flow rose 9% to $5.4 billion. All things considered, those numbers look pretty good in an inflationary environment.
Even so, PayPal has only scratched the surface of its potential. The company puts it addressable market at $110 trillion — 88 times its total payment volume in 2021 — and management believes revenue will reach $50 billion by 2025, implying 18% annualized growth over the next four years. And after the recent sell-off, due in part to weak first-quarter guidance, PayPal stock currently trades at 5.3 times sales — far cheaper than its average valuation of 8.8 times sales over the past five years. That’s why now looks like a good time to buy a few shares. PayPal is not a biotechnology company, but is a highly advanced technology company and part of Sexy Biotech’s research coverage universe.