Author plans to buy a small PayPal position based on a DCF assuming 5% perpetual decline in operating cash flow, arguing the market cap is undervalued even under bearish assumptions.
PYPL — LONG The author is buying a small PayPal position despite low confidence in the business versus competition, management departures, and slow revenue growth. Using a DCF with $6B operating cash flow declining 5% in perpetuity at an 8% discount rate, plus ~$9B book value after eliminating goodwill, the author derives an expected market cap of $55B versus the current $40B. The author frames this as asymmetric risk: if the bear case is true, the depressed entry price should roughly break even, while a bull case would trigger a rerating from prices that assume perpetual decline and death.
6B of operating cash flow, declining by 5% in perpetuity, at a discount rate of 8%, yields a $46B market capitalization based on DCF. Add back the \~9B in book value after completely eliminating goodwill, and I have an expected market cap of 55B vs a current market cap of 40B.
This Reddit post, published February 03, 2026, features u/Virtual_Seaweed7130 discussing PYPL. 1 trade idea extracted by AI with direction and confidence scoring.
Speakers: u/Virtual_Seaweed7130 · Tickers: PYPL