It's still down 80%, but has PayPal's management made such a big move that investors regret not noticing sooner? (translated article)

What's in this article:
$PayPal(PYPL.US)$
+0.77%
$Uber Technologies(UBER.US)$
+0.69%
The stock price of PayPal (NASDAQ: PYPL), a pioneer in financial technology (fintech)Over the past 5 years, it has declined by more than 40%Then, from a record high80% declineI'm doing it. Before I discuss the company's recent announcements that might finally help turn things around, let me discuss some of the issues the company is working on.

First, PayPal is currently struggling to find sales growth. The company's revenue will be small in 2023 compared to the previous year8% increaseI did it. And the first quarter of 20249% increaseThere was only a slight improvement. This is far below what investors are used to.

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Second, PayPal's slight revenue growth came at the cost of profit margins. In addition to the fintech services most consumers are used to, the company also offers unbranded checkout products behind the scenes. And prices for these products were lowered to gain market share.

When both factors are combined, PayPal is struggling to grow, and recent slight growth is unprofitable. This is shown in the free cash flow in the 5-year graph below.

PYPL free cash flow chart
If PayPal can solve this problem of profitable growth, it will be well on its way to improving returns to shareholders. And the management team's recent announcement comes into play.

Major moves by management
PayPal's management has just announced that it will launch its own ad network, which could be quite valuable.

I'm not going to dig up that history. But suffice it to say that PayPal has been talking about a treasure trove of consumer spending data for a long time. And there's no doubt that the company certainly has something of value. After all, the company 427 million active usersIt has payments of over 1.5 trillion dollars per year. There's a useful data point buried somewhere here.

PayPal knows what people want to spend their money on. Furthermore, hundreds of millions of people are already active on the platform, and the company has the opportunity to display plenty of highly relevant advertisements.

What is PayPalUber Technologies (NYSE: UBER), invite Mark Grether and have them lead a new advertising business. It is noteworthy that Mr. Glazer has led the Uber advertising business from the beginning when it started in 2022/10. Less than 2 years later, Uber advertising has already become a $1 billion business.

PayPal is certainly welcoming experienced veterans into building an advertising business. And Glazer may achieve even greater success this time around. Not only does he have plenty of experience leading Uber, but PayPal's user base is also expanding. When Uber started its advertising business, the number of monthly active users was 122 million. By comparison, PayPal had 220 million monthly active users as of the first quarter.