Take a moment to observe your surroundings. The economy is being influenced by digital trends. One notable and impactful sector is the emergence of fintech companies.
The combination of finance and technology has led to the creation of numerous companies that appeal to investors seeking opportunities for rapid expansion. Nevertheless, there is a standout frontrunner in this niche that has demonstrated its value and is currently available at a discounted price.
Here is one extremely affordable. fintech stock to purchase at this moment.
Favorable developments
Investors might want to think about including PayPal ( PYPL 0.03% ) Investors have added shares of this top electronic-payments company to their investment portfolios. The current trading price of the company’s shares is 79% lower than their highest price in July 2021, as the market is concerned about the company’s slower growth.
However, I think those concerns are somewhat exaggerated. PayPal achieved an 8% increase in revenue compared to the same period last year in the second quarter, which is considered quite strong. This growth was fueled by a total payment volume (TPV) that went up by 11% to reach $417 billion, along with an 8% rise in the number of transactions.
PayPal will keep profiting from the increasing popularity of cashless payments. This trend significantly improves convenience and safety for both customers and businesses. There is still ample opportunity to gain more market share by replacing cash and traditional paper-based payment methods.
PayPal aims to achieve growth by launching innovative features, a priority for CEO Alex Chriss, who took on the position less than a year ago. In a recent development, the company unveiled Fastlane one-click checkout and Smart Receipts, which enable merchants to give suggestions and incentives to customers.
It seems to be increasing user interaction. Over the past year, the typical user made nearly 61 transactions through PayPal, showing an 11% increase from Q2 2023. This number has been consistently rising in recent years.
Despite the poor performance of its stock, PayPal actually has very low financial risk. Unlike many other fintech companies, PayPal is consistently profitable.
The balance sheet of PayPal should provide reassurance to shareholders. Although there is a debt of $12.2 billion, it is effectively countered by $18.3 billion in cash, cash equivalents, and investments.
Keeping a balanced view
The slower expansion of PayPal may raise concerns in the market regarding the highly competitive environment in the payments sector. The increasing popularity of other payment methods in recent years cannot be overlooked. Apple Pay The emerging digital wallet is a preferred payment method for iPhone users globally, making it a highly profitable demographic to focus on.
On the business end, PayPal’s Braintree, which has been experiencing rapid growth in Total Payment Volume (TPV), is not shielded from competition. It has to compete with similar companies like Adyen such as Stripe.
However, it should be acknowledged that PayPal’s extensive two-sided platform comes with advantages. The positive impact or benefits that a product or service gains as more people use it. By June 30, there were a total of 429 million active accounts utilizing the service, which included both merchants and consumers. The increasing number of users adds more value to all parties involved.
This stock is very inexpensive, with a forward price-to-earnings ratio of 15.1. It is challenging for investors to come across companies that are both growing and financially healthy, like this one, which are trading at such a discounted valuation.
As previously stated, PayPal is highly profitable, generating significant free cash flow estimated at $6 billion by 2024. The company’s management is strategically utilizing these funds to repurchase shares, signaling their belief that the current stock price is undervalued.
Learning additional information about PayPal should make the average investor more interested in owning this company.
