Is PayPal Stock Underperforming the S&P 500?

Financial (names J - Z) - PayPal Holdings Inc HQ photo-by bennymarty via iStock

With a market cap of $62.9 billion, PayPal Holdings, Inc. (PYPL) operates a leading digital payments platform connecting merchants and consumers globally. Based in San Jose, California, the company facilitates seamless online and in-person transactions across multiple currencies, supporting diverse payment solutions for global markets.

Companies valued at $10 billion or more are generally considered “large-cap” stocks, and PayPal fits this criterion perfectly, exceeding the mark. PayPal has been at the forefront of global commerce for over 25 years, pioneering innovative solutions that simplify and secure money transfers, sales, and shopping experiences, empowering individuals and businesses across approximately 200 markets worldwide. 

However, PayPal has slipped 21.5% from its 52-week high of $76.54, achieved in July last year. Shares of PYPL have dropped 4.3%, lagging behind the broader S&P 500 Index ($SPX) which has seen gains of around 6.4% during the same period.

Longer term, PYPL is down 3% on a YTD basis, lagging behind SPX's 14.9% gains. Moreover, Shares of PayPal have declined 10.3% over the past 52 weeks, compared to SPX's 24.3% returns over the same time frame.

To confirm the bearish price trend, PYPL has been trading below its 200-day and 50-day moving averages since mid-June.

PayPal has faced challenges from increased competition in digital payments, struggling to effectively monetize its Venmo platform and adapt its business model amidst market shifts. However, the stock jumped marginally on Apr. 30 due to its strong Q1 earnings results demonstrating resilience in consumer spending, improved profit margins from effective cost-cutting measures, and an optimistic raised forecast for fiscal 2024 earnings.

To highlight the stock's underperformance, its rival Visa Inc. (V) is outperforming PYPL. Visa stock has gained 19.2% over the past 52 weeks and is up 4.8% on a YTD basis.

Despite the stock’s underwhelming price action, analysts think PYPL can recover soon. The stock has a consensus rating of “Moderate Buy” from the 40 analysts in coverage, and the mean price target of $74.61 is a premium of 24.1% to current levels.

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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.