PayPal Could Be a Massive Winner for Patient Investors. Here's Why.

PayPal Holdings (NASDAQ: PYPL) saw its growth stagnate after the COVID-19 pandemic came to an end, but its new management team has done a great job of returning the company to growth. However, 2% year-over-year user growth isn't likely to get many investors excited.

Just recently, PayPal's leaders held the company's first investor day in four years, and to say that CEO Alex Chriss and his team have some ambitious goals would be an understatement. PayPal aims to accelerate its adjusted EPS growth rate to the "low teens" by 2027, and to further accelerate it to annual earnings growth of more than 20% over the long term.

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To be fair, Chriss and his team have already been hard at work since taking the reins less than a year and a half ago. The initial focus was on efficiency, and that has been successful by most metrics. And the team made some promising moves, many of which, like the recently launched ad platform, aren't reflected in the company's numbers just yet.

How PayPal plans to accelerate growth

At its investor day event, PayPal shared a massive 224-slide presentation outlining management's road map for the future. But just in case you're not too excited to read the entire slide deck, here are some of the key highlights.

For starters, improving the monetization of Venmo is a big focus. The last time Venmo revenue was reported in 2021, it was about $900 million. PayPal aims to scale this to $2 billion by 2027, and to grow it from there. PayPal and Venmo are the numbers one and two most popular payment apps in the U.S., but there's a large monetization gap between the two. The company has already found success with its Pay With Venmo integrations into several major retailers' checkouts, and it has grown the number of Pay With Venmo merchants by 50% over the past year.

PayPal plans to attack other market opportunities in addition to its core online payments market. Management estimates that the company has a roughly 20% share of the $125 billion in potential online payments revenue. However, it has less than 1% of the roughly $200 billion in potential revenue from offline payments and much less than 1% of the $800 billion opportunity in ads, commerce, and credit revenue. I already mentioned the recently launched advertising tech platform earlier, and Chriss said scaling omnichannel payments is a big focus for 2025.

In fact, PayPal's efforts are noticeably paying off. Payment volume on the PayPal debit card doubled year over year in the fourth quarter.

The company shared its plan to combine all of its products under a single platform, and also to continue to focus on engagement within its ecosystem. For example, the average PayPal user who receives a person-to-person payment generates $5 in revenue for the company over 12 months. The average person who receives a P2P payment and uses it to check out online generates $14 for PayPal. The average user who does those things and uses the PayPal debit card generates $25. You get the idea. The deeper a customer is in the ecosystem, the more money PayPal makes.

A lot of different growth levers

Of course, this is just a small sampling of what management discussed. There's only so much of a 224-slide presentation that I can condense into a 650-word article. In addition to the things discussed there, PayPal discussed its plans to grow its small and medium-sized business relationships, maximize the potential of global markets, and to unlock value in enterprise payments through Braintree.

The bottom line is that PayPal's ambition to accelerate its earnings-per-share growth rate to more than 20% and keep it there might sound a bit aggressive. But the company has long-tailed opportunities in several areas of its business, and if it can execute on its vision, the stock could end up being an absolute bargain at just over 14 times forward earnings.

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Matt Frankel has positions in PayPal. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2025 $85 calls on PayPal. The Motley Fool has a disclosure policy.