Is it a Great Time to Acquire PayPal (PYPL) Shares?

ClearBridge Investments, an investment management firm, published its “Large Cap Growth Strategy” first quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Large Cap Growth Strategy underperformed its Russell 1000 Growth Index benchmark during the first quarter. On an absolute basis, the Strategy suffered losses across seven of the eight sectors in which it was invested (out of 11 sectors total). The leading detractors of performance were in the communication services and information technology (IT) sectors, while the financials sector was a contributor. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, ClearBridge Investments Large Cap Growth Strategy mentioned PayPal Holdings, Inc. (NASDAQ:PYPL) and explained its insights for the company. Founded in 1998, PayPal Holdings, Inc. (NASDAQ:PYPL)  is a San Jose, California-based financial technology company with a $119.1 billion market capitalization. PayPal Holdings, Inc. (NASDAQ:PYPL)  delivered a -45.75% return since the beginning of the year, while its 12-month returns are down by -62.66%. The stock closed at $102.31 per share on April 15, 2022.

Here is what ClearBridge Investments Large Cap Growth Strategy has to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q1 2022 investor letter:

“We entered a position in PayPal in December well aware of the electronic payment platform’s ambitious goals for user growth. The company has started to experience a reduction in revenue growth due to weakening in the macro environment and a deceleration in e-commerce broadly due to reopening headwinds and difficult comps. This led to a sharply reduced outlook for 2022 revenue and long-term earnings that has weighed on the stock. We initiated a position after the shares had already fallen 40% from their all-time high but were wrong in modeling that a muted outlook was already priced in. Nevertheless, we believe PayPal is fundamentally holding share in the industry and is set up for continued growth in e-commerce once reopening headwinds pass. The company onboarded nearly 120 million net new users over the last few years; naturally, many users will churn off the platform. We also see the company’s strategy to add additional use cases to its wallet such as investing, crypto, savings accounts and bill pay as catalysts to accelerate revenue growth over time.”

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Our calculations show that PayPal Holdings, Inc. (NASDAQ:PYPL) ranks 14th on our list of the 30 Most Popular Stocks Among Hedge Funds. PayPal Holdings, Inc. (NASDAQ:PYPL) was in 110 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 123 funds in the previous quarter. PayPal Holdings, Inc. (NASDAQ:PYPL) delivered a -43.48% return in the past 3 months.

In April 2022, we published an article that includes PayPal Holdings, Inc. (NASDAQ:PYPL) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.