PayPal Holdings (PYPL) Sold Off Despite Strong Results

Artisan Partners, an investment management company, released its “Artisan Value Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The growth stock trend that had driven US stocks up since late 2022 collapsed in Q1. The fund’s Investor Class ARTLX, Advisor Class APDLX, and Institutional Class APHLX returned 2.23%, 2.24%, and 2.31%, respectively, in the first quarter compared to a 2.14% return for the Russell 1000® Value Index. The relative performance was positively influenced by its sector allocation, which included lower-than-benchmark weightings in information technology and industrials, as well as a higher allocation in consumer staples. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2025.

In its first-quarter 2025 investor letter, Artisan Value Fund highlighted stocks such as PayPal Holdings, Inc. (NASDAQ:PYPL). PayPal Holdings, Inc. (NASDAQ:PYPL) is a technology platform that enables digital payments. The one-month return of PayPal Holdings, Inc. (NASDAQ:PYPL) was 5.49%, and its shares gained 12.61% of their value over the last 52 weeks. On May 29, 2025, PayPal Holdings, Inc. (NASDAQ:PYPL) stock closed at $70.93 per share, with a market capitalization of $68.982 billion.

Artisan Value Fund stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q1 2025 investor letter:

“Among our biggest detractors were PayPal Holdings, Inc. (NASDAQ:PYPL), Alphabet and Merck. Shares of PayPal Holdings, a digital payments provider, sold off despite an overall solid quarterly earnings report in which branded payment volumes growth of 6% year over year was roughly stable compared to the prior quarter and transaction margins expanded. Investors may have been looking to see growth accelerate as reported by a few other payments companies, rekindling broader concerns about the industry’s longer term competitive risks. The selloff looks to be an over reaction, in our view. Shares currently sell for just 13X next year’s expected earnings. We believe this is a highly attractive valuation for a business with above-average—and improving—unit economics, a strong balance sheet and consistent free cash flow. Competent new management is diligently focused on cost cutting, reinvestment and returning excess cash to shareholders.”

PayPal Holdings, Inc. (PYPL): Among Billionaire Cliff Asness’ Stock Picks with Huge Upside Potential

A consumer in a cafe paying for goods using a mobile payment app.

PayPal Holdings, Inc. (NASDAQ:PYPL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 92 hedge fund portfolios held PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of the first quarter which was 94 in the previous quarter. While we acknowledge the potential of PayPal Holdings, Inc. (NASDAQ:PYPL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered PayPal Holdings, Inc. (NASDAQ:PYPL) and shared Sound Shore Management’s views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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