PayPal stock prediction after being tipped to replace credit cards by the Kansas City Fed

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Dec 6, 2021
  • PayPal shares on Monday edged slightly lower despite an upbeat comment by the Kansas City Fed.
  • The city’s payments research briefing department expects BNPL to take charge of the credit market.
  • Affirm Holdings and Square could also benefit from this paradigm shift.

On Monday, PayPal Holdings Inc. (NASDAQ:PYPL) shares edged slightly lower despite receiving an upbeat statement from the Kansas City Fed. The city’s research briefing department said PayPal, Square Inc. (NYSE:SQ) and Affirm Holdings Inc. (NASDAQ:AFRM) could replace credit cards in the foreseeable future.

The department thinks the Buy Now Pay Later services could take over the credit market with banks losing $8-$10 billion in revenue per year over the last two years. Credit card companies like Mastercard Inc. (NYSE:MA) and Visa Inc. (NYSE:V) could witness a significant decline in profits amid the increasing popularity of BNPL payments, with PayPal and its peers benefitting.

PayPal’s exciting growth

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From an investment perspective, PayPal shares trade at a reasonable forward P/E ratio of 34.84, making it an interesting option for value investors.

In addition, analysts expect PayPal’s earnings per share to grow by 71% this year, before rising at an average annual rate of 20.43% over the next five years.

Therefore, the stock could be a compelling option for long-term growth investors.

Source – TradingView

Technically, PayPal shares seem to be trading within a descending channel formation in the intraday chart. As a result, the stock has plunged into the oversold conditions of the 14-day RSI.

Therefore, investors could target potential rebound profits at about $194.27, or higher at $206.40. On the other hand, $173.23 and $160.80 are crucial support zones.

In summary, the recent decline in PayPal stock price presents an exciting opportunity to pounce on its growth story.

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