As of 2024, PayPal stock has dropped 10% over the past year, continuing a trend marked by significant declines. However, the company is navigating through a transformative phase, focusing on innovation under the leadership of its new CEO, Alex Chriss.
With strategic expansion into cryptocurrency trading and buy now, pay later (BNPL) services in the U.S., PayPal is poised for future growth. For investors looking to buy PayPal stock at a discount and position themselves for future gains, investing now could be a smart choice.
How To Buy PayPal Stock
Here’s a detailed guide on how to buy PayPal stock in 2024.
1. Open an Investment Account
Before you can buy or sell shares of PayPal, you need to choose a broker and open an investment account. Brokers act as intermediaries between you and the stock market, executing your trades. They range from low-fee online brokers that allow you to buy and sell stock on your own, to full-service brokers that provide professional investment management services.
Consider the Type of Brokerage Account
- Registered Retirement Savings Plan (RRSP): RRSPs allow you to save for retirement with tax-deferred contributions. Withdrawals during retirement are usually taxed at a lower rate, offering significant tax savings.
- Taxable Investment Accounts: These accounts lack the tax benefits of registered accounts like RRSPs, TFSAs, or RESPs but offer more flexibility. There are no annual contribution limits, and you can withdraw money at any time without penalties.
2. Decide How Much Money to Invest in PayPal
Once your investment account is set up, determine how much money you want to invest in PayPal stock. Consider the following factors:
- Your Overall Budget: Ensure the money you invest is separate from your emergency fund or savings for short-term goals.
- Current Stock Price: As of July 2024, PayPal’s stock price is around $59. Some brokers, like Interactive Brokers and Wealthsimple, offer fractional shares, allowing you to invest a smaller amount.
- Your Overall Portfolio: Diversify your portfolio by investing in multiple companies and industries to reduce risk.
- Your Investing Strategy: Decide whether to invest a lump sum or use dollar-cost averaging. The latter is beneficial for those with limited funds and wanting to spread risk over time.
3. Do Your Due Diligence on PayPal
Investing in individual stocks requires thorough research. Before purchasing PayPal shares, review the company’s financial statements, annual reports, and investor presentations available on its investor relations website.
Understand PayPal’s business model, market position, and future prospects. For instance, PayPal has expanded its services beyond simple online payments to include peer-to-peer payments via Venmo and payment processing through Braintree. Additionally, PayPal allows U.S. customers to trade cryptocurrencies, potentially enhancing its stock’s future value.
Also read: Paypal Share Price Prediction: Can PYPL Double In The Next 5 Years?
4. Place an Order for PYPL Stock
After conducting your research, you’re ready to place an order. Log in to your broker’s trading platform, enter PayPal’s ticker symbol—PYPL—and specify the number of shares you want to buy. For brokers offering fractional shares, enter the dollar amount you wish to invest.
Choose the order type:
- Market Order: This order is processed immediately at the current price.
- Limit Order: This order is processed only when the stock reaches a specific price or better.
5. Evaluate Your Investment
Regularly review your investment’s performance by comparing it to stock market indices. PayPal trades on the Nasdaq exchange, so compare its performance to the Nasdaq Composite Index, which includes over 3,000 stocks.
Is PayPal Stock a Buy?
Despite a 10% drop in the past year and a significant decline over the past few years, PayPal remains a major player in the digital payments industry. The company’s user base has grown from 305 million active accounts at the end of 2019 to 427 million today. Analysts expect PayPal to grow earnings per share by an average of 15% annually over the next three to five years, indicating potential for future growth.
PayPal’s new CEO, Alex Chriss, has introduced fresh ideas to reinvigorate the company. His leadership has emphasized leveraging artificial intelligence and advertising, with initiatives like the Advanced Offers product, which uses data to provide special deals and incentives. These efforts signal promising growth potential.
PayPal’s stock trades at a forward price-to-earnings (P/E) ratio of just under 15. With an expected annualized growth of 15%, the price/earnings-to-growth (PEG) ratio of 1.0 highlights PayPal’s attractiveness. Management’s plan to spend 100% of its cash flow on share repurchases this year shows confidence in the company’s future.
Final Thoughts
Investing in PayPal stock involves selecting the right broker, understanding your investment budget, conducting thorough research, and placing an informed order. Despite recent declines, PayPal’s innovative leadership and strategic initiatives in cryptocurrency trading and BNPL services position it for potential growth.
With its strong market presence and promising future outlook, PayPal offers a compelling opportunity for investors seeking to buy at a discount and achieve future gains. Investing in PayPal stock in 2024 could be a rewarding addition to your investment portfolio.