PayPal Faces Near-Term Issues, but We Still Like the Long-Term Outlook

PayPal’s development of a network of both merchants and consumers early in the evolution of e-commerce allowed the company to build and maintain an enviable competitive position. Historically, PayPal’s growth had been driven by the ongoing shift toward electronic payments and the rise of e-commerce, which the coronavirus pandemic temporarily accelerated. However, the company is now seeing some headwinds in the near term as the positives from the pandemic reverse and new competition arises. Management has attempted to combat the pressure on top-line growth with a greater focus on cost control and product innovation, and we see this evolution as the right move.