Hello people. wanted to drop my raw math on pypl after analysing their latest 10k and 10q filings. everyone on reddit is sleeping on this stock because of competition fears but the numbers tell a completely different story.
if you invest now this stock will perform at least 150% profit over the next few years. sure it could theoretically drop further in the short term due to market sentiment but that would be strictly temporary because the valuation floor is insane.
lets look at the real financial data right now. pypl is trading around 70 dollars a share with about 1.01 billion diluted shares outstanding. that gives us a market cap of roughly 70.7 billion usd. if you look at the balance sheet in the 10k they have around 14.4 billion usd in cash and short term investments against 11.2 billion usd in long term debt. that leaves them with a net cash position of about 3.2 billion usd.
subtracting net cash from market cap gives us an enterprise value of 67.5 billion usd. now look at operating profitability. ttm ebitda is sitting right around 6.8 billion usd which means pypl is trading at an ev to ebitda ratio of only 9.9x. compare that to the broader market and historical tech averages and its absurdly cheap. net income is around 4.4 billion usd which puts the trailing p/e ratio right around 16x.
the real magic is in the dcf math. free cash flow is generating roughly 6.0 billion usd a year. if we project a realistic 8% annual growth rate in fcf per share over the next 5 years driven by steady volume growth and aggressive share buybacks, cash flows look like 6.48 billion in year 1, 7.00 billion in year 2, 7.56 billion in year 3, 8.16 billion in year 4, and 8.81 billion in year 5.
discounting those cash flows at a standard 9% wacc gives a present value of about 28.5 billion usd for the explicit forecast period. if we apply a modest exit multiple of 18x to year 5 cash flows and discount that back, the terminal value is around 103.1 billion usd today. adding that together with net cash gives us an equity intrinsic value of roughly 176 dollars per share.
that is where the 150% profit comes from compared to the current 70 dollar entry price. the market is treating pypl like a dying company when its actually a cash machine shrinking its share count rapidly. even if it theoretically drops in the next quarter or two due to macroeconomic noise, it would be temporary before the cash flow reality forces a re-rating.