Paypal has now been trading at around $238 which is actually very high for the company. According to research by multiple firms and companies, Paypal is currently overpriced. The firm is costlier than many blue-chip stocks of NASDAQ and in no way is the price of the share justified. A big reason for this huge price increase can be contributed to the COVID-19 pandemic. Also, the increased adoption of online payments is another significant cause.
PayPal is currently overpriced!
The accelerating growth and revenue of the company are great. But the company’s fundamentals and the expected revenue growth that analysts are predicting clearly shows that the company is now overvalued. The ratio of the growth of the company and its prices is actually a huge difference and it’s not very natural. The company doesn’t even pay dividends and according to the estimates, its prices are at least 30% inflated.
Why is Paypal’s price surging?
COVID! yes, the pandemic is the main reason for the huge price rise of the company’s shares. It is true that the online payments market was already expanding and increasing at a huge pace. But the pandemic has accelerated the trend. An estimate suggests that the cash to the non-cash ratio of payments will become the same by the end of 2023. And paypal will have a huge role in that. The company’s bullish beta has also been constantly surpassing the bearish beta adding to the price growth of the company.
According to Seeking Alpha, the price at which Paypal is trading now and the growth rate of the company shows the price that Paypal would have been probably in the middle of 2021. Well, the market is bullish till it is, but if it turns bearish due to any reason the stock prices are going to fall very fast.
What are your thoughts on the fact that PayPal is currently overpriced? Is there a chance that the share prices might fall due to this overvaluation? Let us know in the comments below. Also, if you found our content detailed and interesting do like and share ot with your friends.