3 Reasons Why PayPal Is The Best Stock to Invest In
Paypal stock has taken a hit recently due to concerns over slowing growth among its user base and new competition from Amazon. Given these headwinds, it’s understandable if you’re wondering whether now is the right time to invest in PayPal stock. But there are also several reasons why investing in PayPal stock might be one of the best investments you can make at this time. Here are three reasons why investing in PayPal might be a smart move for your portfolio.
If you’re wondering why now might be the right time to invest in PayPal stock, consider these three factors:
- Paypal’s core business continues to grow at a healthy clip.
- Paypal’s stock is cheap compared to the broader market and its own history, with a price-to-earnings ratio of about 15.
- There are concerns about Amazon’s potential entry into the payments space, which could create additional near-term uncertainty for PayPal’s stock.
According to analysts, these factors suggest that PayPal is one of the best stocks to buy now. We have explained here below why.
PayPal’s Advertising Business is Growing Fast
PayPal’s revenue comes from two primary business lines: its payments business and its advertising business. The payments business enables users in 190 countries and territories to make and receive payments online. Meanwhile, the advertising business helps online merchants acquire new customers through online advertising and marketing services.
The payments business has been growing steadily for years. Still, the advertising business has grown even faster in recent quarters, more than making up for slower growth among PayPal’s payment users.
Moreover, the advertising business has been particularly strong in the company’s core markets in North America and Europe. That’s important because it means that the company’s advertising business isn’t dependent on the same growth markets as its payments business.
PayPal has been Investing in new Products and Services
Investors often worry that companies heavily dependent on a single business line are at risk of being disrupted by new technology. That’s what happened to many brick-and-mortar retailers when online shopping gained popularity, leading to “disruptive innovation.”
Some investors worry that the same thing could happen to PayPal, so they might shy away from investing in PayPal stock. Instead, investors might feel more comfortable investing in PayPal stock if they see the company actively investing in new products and services.
PayPal has been doing just that, as evidenced by its recent acquisition of Brazilian payment processing company iFood and its data-driven marketing company Marketability investment. PayPal’s efforts in these areas strengthen its core business and make it less reliant on a specific type of payment, making it less likely that new technology will disrupt it.
PayPal Is Constantly Improving Its Services
Finally, PayPal is constantly improving its services. For example, the company recently made several changes to its user experience, including simplifying its fee structure and introducing a new digital wallet.
These changes make the company’s services more user-friendly, leading to increased customer satisfaction. They also open the door to new products or services, as CEO Dan Schulman recently said during its first-quarter earnings call.
“We’re now working on the next set of products, services, and experiences to create even more value for our customers, partners, and shareholders,” Schulman said. “We’re investing in new products and services that will further extend our unique position at the intersection of commerce and social and expand our leadership position in the digital wallet.”
Institutional Investment in PayPal is Rising
Finally, there are signs that institutional investors are starting to discover PayPal. This is important because it could lead to more stable and consistent trading in the company’s stock, which is currently more volatile than the broader market. In addition, institutional investors are currently putting their money into growth stocks that are expected to outperform the broader market over the next few years.
PayPal’s stock price might have fallen recently, but PayPal stock forecast is now averaging at $122.6, suggesting that growth is on the way. Paypal’s core business is growing, and the company is actively investing in new products and services that could lead to even more growth in the future.