PayPal Stock Is a Solid Buy for at Least One Very Good Reason
PayPal (NASDAQ:PYPL) stock is now nearly 10% on the month and nearly 20% on the years, but that presents an opportunity to get in on a stock with a big future.
The company has gained momentum after the pandemic but the recent sell-off is making investors frustrated.
The world of digital payments has opened up significantly after the pandemic and it is here to stay.
PYPL stock may show some volatility in the short term but the stock is here to stay and soar.
In October 2018, PYPL stock was trading at $80 and it had slowly but steadily reached this level. The company ended 2018 at $83 and hit $120 in July 2019.
The company started 2020 at $108 and once the pandemic hit, the stock went to the sky. PYPL stock was trading at $204 in August 2020 and hit the high of $298 in February 2021.
Finally, PYPL hit an all-time high of $310 in July this year and has been declining since. It is currently trading much lower, at $188. I see this dip as a chance to load up on PYPL stock. Here is one solid reason for you to consider it.
Buy Now Pay Later Is Exploding
PayPal offers unique services to users and the recent popularity of Buy Now Pay Later is attracting new users to the platform.
This feature has gained immense popularity during the pandemic as companies tried to reach out to consumers with a convenient buying option. PayPal launched the “Pay in 4” option by the end of 2020. Through this option, the company allows users to pay for their purchases in four payments and these payments remain interest-free.
The company saw a 400% rise in volume on buy now, pay later and there were a record 750,000 transactions in a single day.
This is also the first time that the company recorded more than $1 billion in purchase volume through this option in a single month. November is only the beginning of the holiday season and a lot more is yet to come.
As we get ready for more holiday shopping, PayPal will see an increase in the use of buy now, pay later and it will have a direct impact on the bottom line.
The revenue and sales number in the holiday season will lay a solid foundation for the company as we enter 2022.
The Bottom Line on PYPL Stock
PayPal is a solid business and one that is going to grow in the coming years. A leader in payment solutions, PayPal will continue to report strong revenue numbers.
It is gaining success through Venmo and the buy now, pay later model. They are here to stay and will improve the bottom line. The company had more than 80 million users at the end of the third quarter and a solid cash balance.
My colleague at InvestorPlace Mark Hake considers the Q3 results and a robust free cash flow good reason to buy the stock.
It may be difficult for investors to look past the current dip in PYPL stock but do not compare it with the pandemic year. All the pandemic stocks are showing a decline and this dip is the right chance to buy.
Out of 31 analysts on TipRanks, 25 have a buy rating and five have a hold rating with a price target of $276 on PYPL stock.
PayPal will continue to attract users and grow in 2022. The Venmo partnership is a strong move in the industry and it will attract new users to the platform. PYPL stock will continue to decline in the short term and it is a great time to load up on the stock.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.
