Analyst U-Turn: The Rising Case for Investing in PayPal Stock Now

Stocks to buy

Some smart people have changed their minds on Paypal (NASDAQ:PYPL) stock. Tipranks saw 2 of its 34 PayPal analysts announce upgrades this month. Most notable is that Josh Brown, who called PYPL stock a value trap in August, at $60, told CNBC recently he just bought in at $58.

As our Will Ashworth notes, PayPal is down 70% from its highs but has many of the strengths value investors look for.

The BNPL Christmas and PYPL Stock

Brown’s view changed in part because this looks like a “Buy Now Pay Later” Christmas.

Affirm Holdings (NASDAQ:AFRM), the BNPL stock that was below $10 in March, is now over $33. Instead of putting purchases on credit cards at up to 30% interest, shoppers are committing the next few months to BNPL plans that may carry no interest.

Paypal leads the BNPL category, according to a recent survey. That’s thanks to an acquisition binge under former CEO Dan Schulman. Venmo has been PayPal for a decade. Xoom has been part of PayPal since 2015.

PayPal also owns other payment brands, like Zettle, HyperWallet and Braintree, which was Venmo’s parent company.

But when alternative payment networks crashed in 2022, PYPL stock crashed with them. PYPL stock was trading at over $180 per share two years ago. It was at $73 by December 2022. It reached a low of just $51 per share in October. Brown’s August call to sell looked smart. Maybe his most recent buy call will be smart as well.

More Reasons to Like PYPL

There’s another reason for new confidence in PayPal. Alex Chriss, a former Intuit (NASDAQ:INTU) executive who was named PayPal CEO in August, has been building a new executive team with people from Intuit, Walmart (NYSE:WMT) and American Express (NYSE:AXP).

The most important hire is Michelle Gill, who worked under Chriss at Intuit’s QuickBooks. Her task is to focus on small business. This is where PayPal hopes to make inroads against Block (NASDAQ:SQ), the company formerly known as Square.

Block’s phone payment dongles and simple pricing made it a favorite with the smallest merchants. But it may now be vulnerable. CEO Jack Dorsey has become enamored with Bitcoin and blockchain, which led to the company’s name change.

I often see Square terminals at the small businesses where I shop. PayPal offers its terminals through Zettle.

Block could be vulnerable to an aggressive PayPal marketing push based on payment and cash management solutions it already has. This includes a small business grant program from Venmo and a cashback credit card. It may also attract small businesses to Paypal’s new support for the Apple (NASDAQ:AAPL) Wallet.

Chriss says his company’s focus has been muddled. He has had layoffs (always popular with analysts) and increased investment in artificial intelligence.

The Bottom Line

There are short term and long term reasons to buy PayPal now. In the short term, you’re buying BNPL and the backing of smart analysts.

In the longer term, you’re buying Chriss’ record at Intuit and his plans for PayPal’s turnaround. Focusing on small business, investing in AI are solid moves. At 46, Chriss is like those smart coordinators NFL teams like to hire for their top jobs, with a solid track record and ambition in his new post.

I haven’t bought PayPal yet, but I’m putting it on my radar.

As of this writing, Dana Blankenhorn had a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines

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