Three reasons this troubled fintech stock could break out of its slump

PayPal plunged 16% this week, but a top analyst makes long-term pleas for the troubled stock.

The company’s underperformance follows uncertainty in leadership. PayPal CFO John Rainey announced last week that he would be leaving the company at the end of May. But Bruderman Asset Management’s Akshata Bailkeri made an optimistic case for PayPal on CNBC’s Fast Money this week.

The company’s equity analyst likes the stock for three reasons:

1. Post-pandemic sales could pick up

Bailkeri, whose company owns PayPal stock, believes sales will pick up in a post-pandemic world.

“We believe that the online percentage of these retail sales should increase in 2023,” said Bailkeri. “PayPal is a major beneficiary of this.”

2. The fork from eBay is advantageous

She claims that PayPal, as a separate company, also bodes well for the stock. Although the stock is lower now, PayPal stock hit an all-time high last July.

“EBay isn’t really a surplus anymore,” Bailkeri said. “The company has continued to grow significantly since the company spun off in 2015.”

3. It’s an attractive valuation over a five-year horizon

According to Bailkeri, PayPal is trading at a significant growth-adjusted discount to its peers. She sees the stock’s volatility as a buying opportunity for gains over the next five years.

“They look at long-term online trends and moves from cash to cashless growth,” she said. “That’s more thought-provoking on a five-year horizon than maybe in the next few quarters.”

Where PayPal is heading

Overall, Bailkeri expects double-digit percentage returns for PayPal over the next five years due to strong secular trends.

“People will continue to shop more online and make more payments in the digital space,” she said.

PayPal, which reports earnings on Wednesday, is down 26% so far this month.

Disclaimer Three reasons this troubled fintech stock could break out of its slump

Jane Marczewski

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