March 27, 2023

Paypal is a popular company that provides online payment services and is known for its famous founding members “The PayPal Mafia”.

Although its founding members have long since left the company, some people believe that its shares are still worth buying. In this article, we are going to take a look at the company’s current position and see if buying Paypal stock is a good idea.

6 steps of buying PayPal shares

Ok, so you have decided that you’d like to buy PayPal. That’s a good start. Now let’s see what lies ahead before you can officially say that you are an PayPal shareholder!

Step 1: Find a good online broker

When recommending a broker, we take into account different factors, like the broker’s fees, trading platform, accessible markets, and how easy opening an account is. Safety is also highly important, but since we only recommend reliable and regulated brokers, you don’t need to worry about it.

Step 2: Open your brokerage account

After finding your online broker, you need to open an account. This process is much like a regular bank account and opening one is usually fully digital. At some brokers the process is as quick as opening a new Gmail account, at others, it could take a couple of days while they do some background check on you.

Step 3: Deposit money to your account

You will pay cash to buy those PayPal stocks. This cash first needs to be sent (deposited) to your broker. The most common way you can deposit your money is by bank transfer and using a credit/debit card. At some brokers, you can deposit from different electronic wallets like Paypal, e.g. at eToro.

Step 4: Buy the PayPal share

Now, you have the account, the cash, and the share target. The last step is to press the buy button! You log in to your online broker, search for PayPal share, insert the number of shares you wish to buy, and click buy, which will initiate the purchase of shares (in trading lingo: execute the buy order).

A couple of hints around this: when placing an order, you can choose from different order types. The market order buys at the actual market price, while the limit order allows you to specify the exact price at which you want to buy the share.

Step 5: Review your PayPal position regularly

You are not completely done yet. Now it is key to monitor your investments. This basically means following your investment strategy. For example, if you bought the PayPal share for holding it for a longer term, you might participate in the annual meeting and collect all the news and information about the company.

If you plan to sell it shortly after you see some increase in the price, you might use different position management tools. E.g. you can set the target price at which you want to sell the share with a profit, or use the stop-loss to set a price at which you want to sell the share to avoid further losses.

Step 6: Place an order for PYPL shares

Now go to the stock section of the broker you have chosen. Here you can look for the PayPal ticker symbol (PYPL) and see the current price at which the stock is trading. If you are satisfied with the price, enter the number of shares you wish to purchase and place the order.

How to start investing in PayPal shares?

To start investing in Paypal and generate a good return from the start, you must:

  1. Familiarize yourself with the financial situation of the company, today and in the past as well as its prospects for the future.
  2. Know the company’s position in the financial markets and among competitors in your sector. In this case, information and technology.
  3. Allocate a percentage of its capital to the investment of this asset, diversifying its investments in an intelligent way.
  4. Sign up with a trusted broker tailored to your needs. Make your first deposit and start investing.
  5. Monitor your investments constantly and actively.
  6. Frequently update your technical and fundamental analysis on the valuation of the company.

How to register?

This process is mandatory on duly regulated trading platforms. Although some of them require more detailed data for their entry, all of them coincide in the user’s basic data (name, surname and e-mail). A basic registration procedure usually includes:

  1. Enter the platform and click on the “Register” button, located in the upper right corner of the platform’s homepage.
  2. Fill in the pop-up form with the required data and create a password for your new account.
  3. Look in the inbox of the email entered during registration for a confirmation email on behalf of the broker. Click on the link that will send it back to the platform to be able to log in.
  4. Once this process is complete, you can enjoy all the features of the platform, use its tools, review the assets it offers, access detailed information, analysis, news and charts for each product, and start trading from your demo or real account.

The benefits of investing in paypal stock

PayPal is one of the most widely used payment methods online and is a trusted brand. With such a market capitalization, some investors may wonder if there are still advantages to investing in PayPal or if it is too late to buy. Although there are some disadvantages which we will discuss later, there are still advantages to investing in PayPal, including the following.

A strong brand

PayPal is a household name and one of the most trusted brands in online payments. The company also has a large customer base, with over 400 million active users. A brand name is important for services like payments because when it comes to money, people want to use a service they trust.

An innovative technology company

PayPal has always been an innovative company. Among the company’s first products are a fingerprint reader and a debit card that allows users to spend their PayPal balance anywhere. More recently, the company has helped develop new affiliates such as Venmo, which is a popular peer-to-peer payment service, and Xoom, which allows users to send money internationally. As a Silicon Valley start-up, PayPal has strong ties to the tech community and is often able to attract top talent. This connection also allows the company to quickly develop new products and services that can be brought to market quickly.

A diversified business model

PayPal has grown beyond just an online payments company. The company has a diverse business model that includes other services such as credit and loans, money transfers, and even in-store payments. This diversification means that PayPal is less dependent on one particular service or product, making it a more stable company. By having a wide range of user-friendly products and services, PayPal can continue to grow its customer base and revenue. The transaction of monetary values ​​is something that will always be in demand, which gives PayPal a solid base to grow its business.

The risks of investing in paypal shares

Data concerns

As we’ve seen with other companies like Facebook and Google, data is a precious commodity . And like these companies, PayPal also collects data about its users . Although this data is not as personal as that collected by Facebook or Google, it is still sensitive information that could be used to exploit users if it fell into the wrong hands.

Consumers might start boycotting PayPal if they feel their data isn’t safe. This could lead to fewer users and a corresponding drop in revenue, which would be bad for shareholders.

Competition

Although PayPal is the main online payment company, it faces strong competition from other companies such as Square and Stripe . These companies are rapidly gaining market share and could pose a threat to PayPal in the future.

Investors should keep an eye on the competition to see if there are any new products or services that could eat away at PayPal’s market share. Other notable competitors include Shopify, which is offering new products like Shop Pay in an attempt to carve out a piece of the payments pie.

A high valuation

PayPal is currently trading at a high valuation, which means there is less upside potential and more downside risk. PayPal Holdings’ price-earnings (PE) ratio as of September 23, 2022 is slightly above 29. Most value-style investors consider it to be slightly above average.

Buying overvalued companies is generally considered more risky, as there is a higher risk of the stock price falling. As a technology services company, volatility and disruption are also concerns.

Cryptocurrencies and p2p networks

With the rise of cryptocurrencies and peer-to-peer (P2P) networks, PayPal may face some competition in the future. Cryptocurrency is a decentralized form of payment that uses cryptography to secure transactions.

Bitcoin is the most well-known cryptocurrency, and although it is considered a store of value, innovations such as the Lightning Network are increasing its usefulness as a means of payment. This low-cost payment method would eliminate PayPal as a middleman and could potentially reduce company revenue.

while PayPal is still the leader in online payments, there is no guarantee that this will remain the case in the future. With the emergence of new technologies and payment methods, PayPal will need to continue to innovate to stay ahead of the competition.

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