Motley Fool Money PayPal's Growth Story
Jun 20, 2023
Nick Sciple, a savvy investment analyst, and Robert Brokamp, an expert in retirement planning, dive into PayPal's bold move to sell off over $40 billion in Buy Now, Pay Later loans. They discuss how this sale impacts PayPal's financial strategy and its role in the fintech realm. The conversation shifts to DraftKings' ambition in sports betting and the unique challenges it faces with customer retention. Additionally, they answer listener questions on navigating retirement savings and investment strategies, providing insightful tips for financial planning.
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PayPal's Divestment Strategy
- PayPal is selling $40 billion of its Buy Now, Pay Later loans because the segment grew too quickly.
- This move allows PayPal to remain asset-light and focus on its core strength as a consumer payment portal.
Investing in PayPal
- At its current valuation, PayPal is an attractive buyback candidate due to its projected earnings growth and low multiple.
- Buying back shares and attaching additional services to existing users can drive further value.
Private Equity Debt Concerns
- Private equity firms face increasing financing costs due to rising interest rates on floating-rate debt.
- This surge in debt service requires firms to increase cash flow or accept reduced margins.