Topped up PayPal in the Trading 212 SIPP today. This is about as exciting as watching paint dry, and I mean that as a compliment. No crypto volatility like Coinbase. No takeover speculation. No AI hype cycle. No earnings drama. Just a global payments network that processed over $1.5 trillion in total payment volume last year, quietly generating billions in free cash flow and buying back its own stock while the market looks the other way.
── The Boring Case for PayPal ──
PayPal owns one of the most recognised digital payment brands on the planet. It operates in over 200 markets, has more than 400 million active accounts, and owns Venmo — the dominant peer-to-peer payment app in the US. The core business is simple: take a small cut of every transaction that flows through the network. When more people pay online — and they do, every year — PayPal earns more revenue. That's the thesis in one sentence.
The stock has been absolutely hammered since its pandemic highs. From roughly $300 in mid-2021 to... considerably less. The market fell out of love with anything labelled 'pandemic winner' and never really came back. But here's what happened while the share price was falling: the business kept growing. Slowly, yes — not the hypergrowth of 2020 — but growing nonetheless. Revenue is up. Transaction volume is up. Active accounts are broadly stable. Free cash flow remains strong — billions a year. And the company has been using that cash flow to buy back stock aggressively, reducing the share count and increasing each remaining share's claim on the underlying business.
── Why It Fits the Portfolio ──
I own a lot of things that people get excited about: Meta (AI advertising cash machine), VUAG (American capitalism in a can), Coinbase (crypto infrastructure speculation). PayPal is none of those things. It's a mature, profitable, slightly unloved payment network trading at a valuation that — in my assessment — doesn't reflect the durability of the franchise or the compounding power of the buyback programme.
That's the kind of holding that anchors a portfolio. Not everything needs to double in two years. Some things just need to compound steadily at a reasonable rate of return for a long time. PayPal at today's price, with billions in annual buybacks reducing the denominator, fits that description.
── The Risks ──
Competition is the obvious one. Apple Pay, Google Pay, Block (Square), Stripe, and a dozen fintech startups all want a piece of the payments pie. Buy-now-pay-later providers like Klarna and Affirm are taking share at the checkout. And in some markets — particularly China — Alipay and WeChat Pay dominate entirely. PayPal's moat is brand trust and ubiquity, not technological uniqueness. That moat can erode.
There's also the Venmo monetisation question — it has tens of millions of users but has historically struggled to turn them into meaningful profit centres. The 'Pay with Venmo' button is growing, but it's not there yet. And activist investors have been circling, which can be either a catalyst for positive change or a source of distraction and short-termism.
── Steady But Sure ──
The title is the thesis. PayPal is not going to make me rich overnight. It's probably not going to be the best-performing stock in the SIPP over any given year. But over a decade, a profitable, cash-generative business buying back its own stock at a reasonable valuation has a very good chance of delivering solid, compounding returns. Not exciting. Just effective.
That's the thing about compounding: it doesn't need excitement. It needs consistency. A business that grows earnings modestly, returns capital to shareholders, and doesn't do anything stupid will, over time, make you wealthier than a business that shoots the lights out one year and implodes the next. PayPal is in the former camp. Steady but sure wins the day, and over enough days, steady becomes substantial.
As always: this is what I did with my own money. Not a recommendation. All investing carries risk — you can lose money, and past performance doesn't predict future returns. PayPal (PYPL) carries specific risks including competitive pressure in digital payments, regulatory risk across multiple jurisdictions, execution risk, and the risk that the brand's relevance diminishes over time. US-listed shares carry currency risk for UK investors. Do your own research.