This is my second company deep dive. I have been digging deep in the fintech industry lately as I believe it is one of the most exciting battlegrounds for the next few decades, and PayPal is a must-read for fintech investors, given that it pioneered online payments more than 20 years ago. With that said, grab a cup of coffee. This is a deep dive on PayPal (PYPL).
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Investment Thesis
The bull thesis for PayPal is the increasing adoption of digital wallets and PayPal is at the forefront of this shift due to its enormous ecosystem of consumers and merchants. The launch of the SuperApp and management’s shift in strategy to focus on engagement will also be key as PayPal looks to drive meaningful ARPU from this digital wallet trend. However, growth is decelerating quickly due to tough YoY comps and a challenging macro environment. Furthermore, competition from other neobanks and digital wallets is heating up, which may add further pressure in terms of growth. However, PayPal has strong brand and network effect moats that should protect the…
