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Is PayPal Holdings, Inc. (NASDAQ:PYPL) The Best Digital Payments Stock?

Ramish Cheema
·4-min read

The digital payments industry is quite lucrative. It stands right at the cusp of a consumer's economic interaction, allowing digital payments firms to take a commission from almost all transactions that they process. This means that as long as the economy grows, digital payments firms are able to grow their transaction volumes provided all other things remain equal. To understand this, a brief look at the performance of the Nasdaq CTA Global Digital Payments Index can help. The index lost more than 20% when American and global consumers were feeling the inflationary and interest rate pinch. But since October, it has gained quite a bit, as the economic clouds turn gray from black.

Due to this dynamism, we decided to take a look at the recent performance of PayPal Holdings, Inc. (NASDAQ:PYPL) as part of our list of the 10 Best Digital Payments Stocks To Buy Now. While PayPal Holdings, Inc. (NASDAQ:PYPL) is not the best digital payment stock according to the methodology of this list, it still ranks 3rd. Therefore, the stock merits a sharper look at some recent financial performance, hedge fund sentiment and analyst ratings.

PayPal Holdings, Inc. (NASDAQ:PYPL)

PayPal Holdings, Inc. (NASDAQ:PYPL) is one of the more iconic companies in American business history. It was one of the few successful firms in the dot com era that sought to leverage the Internet to create an alternative platform for payments. Since then, PayPal Holdings, Inc. (NASDAQ:PYPL) has grown to touch a market capitalization of $64.8 billion and run more than a trillion dollars of transactions through its platform.

PayPal Holdings, Inc. (NASDAQ:PYPL)'s recent financial performance:

Like several digital payments stocks, PayPal Holdings, Inc. (NASDAQ:PYPL)'s financial performance also depends on the state of the economy. Its most recent quarterly results were for the first quarter of 2024. They saw PayPal's adjusted earnings per share of $1.08 miss consensus analyst estimates of $1.22 by a large margin. However, there's a bit more to this miss, which is also a major reason why PayPal Holdings, Inc. (NASDAQ:PYPL)'s shares rose despite the miss. The first quarter earnings came with a new reporting format, and the firm's adjusted EPS according to the older format was $1.40. This figure also heftily surpassed PayPal Holdings, Inc. (NASDAQ:PYPL)'s guidance of $1.17.

PayPal Holdings, Inc. (NASDAQ:PYPL) and hedge funds:

Shifting gears, let's take a look at how hedge funds are treating PayPal Holdings, Inc. (NASDAQ:PYPL). According to Insider Monkey's data, 82 hedge funds had bought the firm's shares as of Q1 2024. When compared to the $2.3 billion in stakes that 87 funds had held in the prior quarter, the latest figure of $4.1 billion is interesting to say the least. Within these hedge funds, Ken Griffin's Citadel Investment Group holds a $581 million stake, which is the most valuable for PayPal Holdings, Inc. (NASDAQ:PYPL) in our hedge fund data.

What Do Analysts Say About PayPal Holdings, Inc. (NASDAQ:PYPL)?

As for the analysts, the average of 36 one year analyst share price targets for PayPal Holdings, Inc. (NASDAQ:PYPL) is $75.78. Among recent ratings, only RBC Capital has rated the shares as Outperform. Its latest analyst note for the digital payments company came out in May 2024. In it, RBC reiterated the share rating but slashed PayPal Holdings, Inc. (NASDAQ:PYPL)'s share price target to $70 from a hefty $86.

So, Is PayPal Holdings, Inc. (NASDAQ:PYPL) the Best Digital Payments Stock?

Judging by these factors, while PayPal Holdings, Inc. (NASDAQ:PYPL) is one of the top players in the global digital payments market, it still isn't the best digital payments stocks according to hedge funds. The digital payments industry is highly competitive, and often sees sizeable players try and leverage artificial intelligence to predict which card holders can be victims of fraud. Wondering how that is?

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You can check out our detailed explainer in 10 Best Digital Payments Stocks To Buy Now, where PayPal Holdings, Inc. (NASDAQ:PYPL) ranks 3rd.

If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.