u/investorinvestor ·
Reddit — r/ValueInvesting
· May 14, 2026 at 13:17
· ⬆ 16 pts
· 💬 12 comments
| View on Reddit ↗
AI Summary
Summary
The post argues that PayPal (PYPL) is undervalued and that a successful turnaround could triple the share price to ~$120, driven by 50% EPS growth, aggressive buybacks, and multiple expansion.
The author believes current options are cheap, implying a favorable risk/reward for bullish plays.
Quality assessment: Speculation with some supporting data (buyback rate, cost cuts), but lacks rigorous fundamental analysis; more of a thesis than deep DD.
Score16
Comments12
Upvote %70%
▶ Full Post Text
Imagine if management somewhat successfully engineers a turnaround and normalized EPS grows by 50% from here. This is not particularly hard to do, given that management has already announced that they are planning to reduce the share count by roughly 12% per annum (at current prices) and have announced drastic cost-cutting measures. In such a scenario, markets would most definitely be slightly more optimistic than they currently are about the company’s prospects, and may assign a 2x increase to the multiple (i.e. 16x PE). Combined, the two should result in the share price rising threefold to about $120 in a successful turnaround.
Management plans 12% annual share count reduction and drastic cost cuts; normalized EPS could grow 50%. If EPS grows and sentiment improves, PE could double from ~8x to 16x, creating a 3x price move; options now cheap. Long PYPL (stock or cheap calls) to capture potential turnaround re-rating. Turnaround fails, revenue declines, competition (e.g., Block, Apple Pay), macro headwinds, or buyback not executed.
This Reddit post, published May 14, 2026,
features u/investorinvestor
discussing PYPL.
1 trade idea extracted by AI with direction and confidence scoring.