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PayPal reported earnings yesterday, and the stock went down 20%.
They fired their CEO and replaced him with Enrique Lores, HP’s current CEO.
Is this a failing business that we need to sell?
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Investors on social media frequently call PayPal PainPal because the stock price has had such a wild ride.
From March of 2020 to July of 2021, PayPal shot up 250% as people bought everything online.
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Investors were way too optimistic and were paying more than 100x earnings at the peak.
That optimism flipped and PayPal is now down more than 85% (!) from the pandemic highs, earning it the PainPal nickname.
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A stock this beaten down is obviously a company going out of business, right?
Let’s look.
Is PayPal a broken business?
A broken business would surely have falling sales. Does PayPal?
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Nope.
But revenue growth can be created by reducing profits… maybe PayPal has falling profits.
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Nope.
Here’s their Operating and Net Margins: