Bought yet more PayPal (PYPL) in the Trading 212 SIPP today. This position has been one of the most controversial in the portfolio — the fintech turnaround that nobody believed in — and I keep adding because the numbers keep telling a better story than the narrative. PayPal's branded checkout business is growing again after the post-pandemic reset. Venmo is finally being monetised properly, with the debit card, pay-with-Venmo, and business profiles all gaining traction. Braintree — the unbranded payment processing behind companies like Uber, Airbnb, and thousands of others — is scaling rapidly and taking share in the enterprise payments market. And the new CEO, Alex Chriss, who took over in late 2023, is doing exactly what needed doing: cutting the bloat, focusing on profitable growth, and rebuilding the culture of execution that made PayPal great in the first place.
The numbers back this up. Transaction margin dollars — the metric that actually matters for a payments business — have stabilised and are growing again. Active accounts are still a huge base (over 400 million). Payment volume per active account is rising. And the company is generating significant free cash flow, much of which is being returned to shareholders through aggressive buybacks. At the current valuation, PayPal is trading at a meaningful discount to the broader market on a price-to-earnings basis — a discount I believe is unwarranted for a business of this quality with this much embedded optionality.
PayPal is not a bank. It doesn't take credit risk. It's a technology company that moves money — connecting consumers, merchants, and financial institutions across 200+ markets and 25 currencies. That network effect — 400 million consumers on one side, 35 million merchants on the other — is a genuine competitive moat. You can build a payment processor. You cannot easily build a two-sided network where both sides already have accounts, saved payment methods, and trust in the brand.
The bear case — that Apple Pay, Google Pay, open banking, and the general commoditisation of payments will crush PayPal — has been the dominant narrative for years. And it hasn't happened. Because paying with a card stored in Apple Pay is still processed by someone — and that someone is often Braintree (owned by PayPal). Because Venmo is a social payments network that younger users genuinely use as a verb ('I'll Venmo you'), and that kind of brand embedding doesn't get displaced by a generic wallet. Because merchants trust PayPal's fraud protection, dispute resolution, and buyer/seller protection in a way they don't trust newer, leaner processors. The moat is real. The commoditisation thesis is overstated.
This is still one of the highest-conviction positions in the SIPP. Not because I think PayPal is going to 10x next year — it's not. But because I believe the business is worth considerably more than the current share price implies, the turnaround under new leadership is working, and the gap between the narrative and the numbers will close over time. When that gap closes, early buyers who kept adding through the doubt get rewarded. I'm comfortable being one of them. As always, nothing on this site is financial advice. Do your own research.