Key insights
- The author argues PayPal is a value trap due to internal cannibalization, declining market share, ineffective share buybacks, and poor management. They criticize the reliance on Venmo and Braintree as moats and highlight concerns about the company's corporate culture and ability to attract talent. The author points to Michael Burry's investment as a contrarian indicator, given his past trading losses. This suggests potential downside risk for PYPL and the broader FinTech sector.
PYPL bulls like to argue PayPal’s “moat” being Venmo and Braintree - but what moat? Tell me why these 2 products make PayPal defend and gain market share? PayPal’s own lines of businesses are cannibalizing each other.
Historic revenue growth is a joke when you price in further market share deteriorating.
Share buybacks only offsets SBC. Keep convincing yourself this company is a self cannibalist that can buy itself into a multi bagger - it cannot and it will not maintain the same multiples.
Management team sucks and the thesis of : New CEO seems to know what they are doing is a lame and lazy excuse and was used on every new CEO. And corporate culture has been garbage and no top talent would join. This is a structural issue with the business - much bigger than ur share buyback and stable revenue fantasy. The company will do worse and worse and the stock price will follow.
Even the clown Michael burry bought - well the same buy bought GameStop and sold for a loss and lost more money shorting NVDA. He makes more money selling monthly subscriptions than his trading activities.