PayPal Holdings, Inc. (PYPL)—the company that allows you to send and receive money, pay for online purchases, and send some cash to your buddy for that coffee you owe them. Whether you’re paying for your latest impulse-buy or your parents’ birthday gift, PayPal has made digital payments super easy. But the question is: Should you bet on PayPal as a long-term investment?

Let’s dive into PayPal’s numbers, the CEO's reluctance to buy in, and whether this stock is worth considering for your portfolio.

What’s the Deal with PayPal? 🏦💸

PayPal is everywhere in the world of digital payments. The platform connects businesses and consumers, enabling payment transactions through multiple funding sources: PayPal balances, bank accounts, credit and debit cards, and even cryptocurrencies. Not to mention their own suite of services like Venmo, Xoom, Braintree, and Honey. PayPal is a digital payments powerhouse—so, why the hesitation when it comes to investing? 🤔

The CEO and His Reluctance to Buy Shares: A Bit of a Red Flag? 🚩

Now, let’s get real: PayPal’s CEO, Alex Chriss, has been with the company for over a year since joining on September 27, 2023. Before joining PayPal, Chriss had a pretty stellar career at Intuit, where he managed QuickBooks and Mailchimp. Sounds like a guy who knows how to steer a company, right? But here’s the catch: despite the company’s shares trading at a seemingly attractive price, Chriss (and the entire management team) hasn’t bought any shares on the open market.

Now, that raises some serious questions. If PayPal's stock is as cheap as it seems, why aren’t the top execs putting their money where their mouth is? Isn't it fair to wonder if the CEO, who’s new to the job, sees the same value we do? 🤔 Should we be the ones buying in when even the management team appears hesitant?

PayPal’s 4Q 2024 and FY 2024 Numbers 📊

Let’s take a look at the company’s numbers to get a clearer picture. Here’s what PayPal showed in its recent earnings report:

• 4Q’24 Net Revenue: $8.4 billion, up 4% YoY. 📈

• Transaction Margin: $3.9 billion, up 7%. 💪

• GAAP Operating Income: $1.4 billion, down 17% YoY. 🚨

• GAAP EPS: $1.11, down 15%. But hey, non-GAAP EPS increased 5%, so there’s some good news! 📈

• Active Accounts: Up 2.1% to 434 million. That’s a lot of people using PayPal. 🤑

So, What Does This All Mean? 🤷♀️

The numbers show that PayPal is still growing, albeit slowly. Revenue and transaction margins are up, but the company is dealing with some growing pains. That’s where the question arises: With all this positive cash flow and strong user growth, why isn’t the leadership team all in?

• Cash Flow: PayPal generated $2.4 billion in cash flow from operations in 4Q’24. That’s a solid cash engine. 💰

• Share Repurchases: PayPal returned $6 billion to shareholders in FY’24, repurchasing around 92 million shares. So, they clearly think their stock is a good deal—just not enough to buy personally. Bonus: PayPal’s Board of Directors has authorized a new $15 billion stock repurchase program. This new repurchase authorization is in addition to the Company’s June 2022 stock repurchase program, which had $4.86 billion remaining authorization as of December 31, 2024.💸

• Profitability: PayPal is profitable (with plans of 20% EPS growth year-over-year and margins stabilizing if not expanding).

• Strong Balance Sheet: The company holds $15.4 billion in cash, so PayPal isn’t exactly scraping the barrel. 💪

Risks: PayPal’s Challenges 💥

PayPal might be a big player in the fintech space, but it’s not without competition. Here are the risks you should be aware of:

1. Competition: PayPal is still the big dog, but there are challengers like Square, Apple Pay, and other digital payment solutions. 💳

2. Execution Risks: The new CEO, Alex Chriss, has a solid track record, but this is his first time at the helm of a major company. He’s still getting his feet wet. 👣

3. High Debt: PayPal’s got $11.1 billion in debt. Not a disaster (especially given the cash at hand), but definitely something to keep an eye on. 📉

4. Slow Growth: While PayPal is still growing, it’s at a slower pace than it used to be. A 4% revenue increase isn’t lighting the world on fire. 🔥

Why Should You Consider PayPal? 📈

Despite the risks, PayPal is still a solid company with strong fundamentals. If you’re looking for an investment in the digital payments sector, it could be a good pick, especially considering its strong balance sheet, growing user base, and ongoing share repurchases.

What makes PayPal particularly interesting is its balance of value and growth. The stock isn’t ridiculously expensive, with a P/E ratio of 16.79, which is pretty reasonable for a company in its position. If the leadership team ever starts buying in, then maybe you’ll feel more comfortable too. 🤞

Final Thoughts 🤔

Is PayPal a no-brainer investment? Not exactly. But with strong cash flow, active users, and an entrenched position in the digital payment space, it’s got a lot going for it. Sure, the CEO and management team might not be rushing to buy in, but they’re still making strong moves to return cash to shareholders.

If you’re willing to take on some risk in exchange for both value and potential growth, PayPal might just be worth considering. After all, sometimes the best opportunities come when the stock’s just right for a long-term hold. 🌟

Disclaimer: As always, take everything with a pinch of salt. (But don’t worry, we’re all friends here.) 😄