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Is PayPal Living Up to Expectations?

The way the financial services industry is being shaken up, one would expect that PayPal (NASDAQ:PYPL) – once a true-blue disruptor – has everything going for it. But somehow, it’s not been able to garner enough Wall Street confidence. For sure, like most tech players, the PYPL stock gave pretty good returns over the last one year – going from $36 all the way up to $59. But still analyst faith seems to have been wavering.

Confidence Meter

PayPal Stock Price vs Confidence Meter

Evidently, PayPal Confidence Meter (CM) which now stands at 52% has not really been consistently high over the last few months – a period when most tech (and many financial services) stocks have had sky-rocketing Confidence Meter values (What’s Confidence Meter? Read here). Never quite getting into the 80s, PayPal CM went up to 70% but then fell twice recently – first to 53% and then to 52%, after having briefly risen to 57%.

Interestingly, while the price was rising during the period that the CM was going up, price did not take a hit when CM went down. That said, CM is more a long-term parameter and we still need to see if PayPal breaches the $60 mark and stays up from there.

The Medium-term view

PayPal Revenue Forecast

Looking at what could actually happen with a company is often the best way to know if it’s a good value bet. And on that count, PayPal seems to being doing alright. While forecasted revenue growth is certainly not steep, there’s definitely consistency. But probably that’s where PayPal seems to be faltering. The way new technologies are revolutionalizing the financial services arena, companies like PayPal have significant expectations riding on them – they are not meant to be playing along or participating, but leading the change.

Perhaps the street thought PayPal should be the Amazon of payments but found that there are too many people out there trying to eat PayPal’s lunch – including companies like Apple and Samsung.

It will be certainly fascinating to see how PayPal reacts to things like blockchain and if it just reacts or goes on to lead.

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Gordon T
Gordon writes about tech stocks, startups and trends. Also loves to dabble in finance with a focus on fintech.

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