Digital payment processor and registered payment facilitator PayPal has been gaining notoriety this year in stock share and overall market value. So much so, the payments platform has now surpassed AMEX in market capitalization (commonly referred to as ‘market cap’). This means the total dollar market value of PayPal’s outstanding shares (registered at $83 billion) is now valued slightly above AMEX (registered at $82.1 billion), according to Investopedia. And, the same article states PayPal shares have increased more than 65 percent since the start of the year – compared to AMEX with a 24 percent increase.
So, what about the other major card brands? How do they stack up? According to the same article, they are coming in second to the payment facilitator in a different measure of success.
‘Forward earnings’ is a term used to reference a company’s forecasted or estimated earnings. What makes them different from standard earnings is they are based on projection and not fact. That being said, the same article reports, citing FactSet and The Wall Street Journal, that PayPal is now trading at a multiple that is around 32 times forward earnings. This compared to Visa at 27 and MasterCard at 29.
What does this do to PayPal stock? Well, it’s been upgraded, to say the least. According to The Motley Fool, Morgan Stanley has upgraded PayPal to overweight status in the stock market – increasing the price target (the price predicting where the stock will head in the next 52 weeks) from $66 to $76.
And what about any potential pitfalls that could prevent the stock from continuing its dramatic rise? According to the same Motley Fool article, there may be one. PayPal is up for contract renegotiation with global online marketplace eBay in 2020. Currently, PayPal is touted as the company’s payment provider of choice. Speculation around whether the upcoming renegotiation will result in “less favorable” terms appears to be the only thing that may make investors weary.
But for now, the future of this payment facilitator has never looked so bright.