PayPal Holdings Inc (NASDAQ: PYPL) Has Been Underperforming For The Past Year

PayPal Holdings Inc (NASDAQ: PYPL) and over e-commerce companies in the U.S have been underperforming. Their market value has reduced by more than 21% over the year. The S&P 500, on the other hand, has declined by about 7%. This decline was also apparent in 2022 when the companies only rose by 6%. The S&P 500 managed to increase by  27%.

The underperformance has led many analysts to ask why this is happening. One reason is that investors have limited their exposure to high-multiple, high-growths stocks because of inflation. The federal reserve is also getting ready for interest rises this year, the first which it expects will happen in March.

Analysts also note that e-commerce companies that performed well with the pandemic began because of movement restrictions are not as popular. The reason is that movement is becoming more regular.

Fortunately, the foundation for the e-commerce market is still strong. E-marketer, a research firm, removes the e-commerce market sales will increase by nearly 6% over the year.

RiverFund Analyzes PayPal

The River Park Fund also gave its opinion on PayPal in its 2021 fourth-quarter investor letter. PayPal, which has a market capitalization of $147.2 billion, has had a return of -33.1% since 2022 began. Moreover, its returns for the last 13 months are -53.21%.

RiverFund points out how PayPal shares have reduced, and its guidance doesn’t meet current market expectations. However, due to supply chain disruptions, the company reported its guidance to be a revenue growth of 18%.

Business for PayPal has also been disrupted by the easing of restrictions which has reduced online purchases. Fortunately, the commonly expects growth in 2022. The company seems to be doing well as it is already the third-largest payment company after Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA).

PayPal is in more portfolios

Despite its consistent underperformance, RiverFund has ranked PayPal as 9th in its list of the 30 Most Popular Stock Among Hedge funds. The company is now in 143 hedge fund portfolios when it was previously in 123.

The Buy Now Pay Later (BNPL) market in the U.S has also reported that payment could increase by 66.5% this year. This growth could benefit e-commerce companies like PayPal.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.