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Currently have a 1% position, literally my worst performer by a landslide (down 35%). At first I was considering using the position for tax harvesting for gains, but I’m just not convinced the thesis is broken. I wanted to revisit the company and see if I would buy again with fresh capital (today), and no matter how I tried to spin it I landed on yes.
People love to hate on PayPal here, but fact of the matter is it is one of the most recognized and trusted payment providers globally. This might just be my anecdotal experience and I might be completely wrong (anecdotal experience is always dangerous), but I’ve used it as both as a seller and a buyer, and in my experience the buyer and seller protection is a moat. I’ve won against scammers multiple times as a seller (if you as a seller are legit and actually put in effort in gathering backup evidence and proof of delivery you actually win). Same on the buyers side. It’s been a live saver more times than I can count.
Sure paying my parking ticket I might use Apple Pay, or when I go to the store. But PayPal is fighting back on tap to pay with their PayPal debit / credit card to compete with the comfortability of google pay / Apple Pay. And as soon as I order something online, using anything other than PayPal is out of the question for me. I don’t like putting my CC information into a website I’ve never ordered before. It’s simple, it’s convenient, and you’re protected. Branded checkout growth might be stalling and competition might be high, but I don’t think it’s dead. Maybe a few tough quarters, but overall, the moat is still there and I like the new Fastlane feature where Braintree automatically recognizes your PayPal. I believe this may also help reignite the branded checkout and is a bit overlooked.
Overall, I think branded checkout isn’t dead. Braintree is growing and will help bring more growth to branded checkout with fastlane. Venmo is super popular and just needs to be properly monetized. They haven’t gotten it so far, but I’m sure they’ll manage. They own the data on shopping habits for 400+ million users worldwide they can sell. It was bound to stagnate at some point, but seeing a Stripe worth 4-5 PayPal’s and Block inc trading higher than PayPal just makes no sense to me.
I’m not the biggest fan of the new ceo but as long as he continues buybacks / cuts costs and makes sure TPV keeps growing, even just very low single digits, I believe PayPal will be fine. Even if they lose market share, the total TPV will keep growing and PayPal inadvertently as being one of the largest players. It’s a mature business. No 10+% growth story, but it doesn’t have to be. Just buyback shares like HPQ and try to grow along with the total payment market or even slower, while canabalizing shares.
rant over. Im buying painpal tmrw, wish me luck