I just put $180k into PYPL stock. Here's why...

About this video

• Video Title: I just put $180k into PYPL stock. Here's why...
• Channel: Ryan Daniel Moran
• Speakers: Ryan Daniel Moran
• Duration: 15:38

Overview

In this video, Ryan Daniel Moran explains his decision to invest $180,000 into PayPal (PYPL) stock. He outlines his overall investment strategy, which involves a base in index funds for long-term growth and allocating a portion to high-conviction individual stocks. Moran details his analysis of PayPal, covering its financial performance, market valuation, growth potential, and recent strategic initiatives under new leadership, ultimately concluding that it represents an undervalued investment with a strong future outlook.

Key takeaways

• Investment Strategy: The speaker allocates a significant portion of his annual investments to boring index funds (S&P 500, QQQ) for compounding growth, and uses the remaining capital to invest in one high-conviction stock per month.
• Reason for Investing in PayPal: Despite PayPal being perceived as a "boring" or "dying" company, the speaker sees value in its profitability, market position, and a 10% free cash flow return relative to its market cap.
• Financial Analysis: PayPal generated $6.75 billion in free cash flow in 2024, with a market cap of $70 billion, indicating a 10% cash flow return. The company's earnings per share have a 10-year compound annual growth rate of 27%, with analysts projecting a future growth of 15% per year.
• Valuation and Future Potential: Based on projected earnings and a price-to-earnings ratio of 30, the stock could theoretically reach $600 per share in 10 years. A discounted cash flow model suggests a fair value of $120, and the speaker set a buy price under $75, which aligns with the current stock price.
• Strategic Initiatives: New CEO Alex Chriss is transforming PayPal into a "commerce platform" with initiatives like Fast Lane Checkout, a PayPal stablecoin, and the monetization of Venmo, all of which are seen as positive catalysts for future growth.
• Share Buybacks: PayPal's authorization of $20 billion in share buybacks is highlighted as a significant factor that could increase the ownership percentage of existing shareholders.