Martin Shkreli Sees HUGE OPPERTUNITY In PayPal And Here’s Why

Summary

The transcript offers a detailed analysis of PayPal's stock, focusing on its valuation and growth potential, especially at a 10x earnings multiple. The speaker discusses investment strategies, including the influence of hedge fund Elliot Management, led by Paul Singer, which is known for low-risk, steady returns. The conversation touches on PayPal’s market position, with insights into its financial metrics, such as its $1.7 trillion in processed payments. The speaker emphasizes that, while they don't like the product, they find PayPal’s stock an attractive investment, despite challenges in the fintech sector and competition from other companies like Affirm.

Takeaways

• 😀 The speaker discusses their frustration with the unpredictability of traveling and the configuration of their belongings.
• 😀 PayPal's market cap is low, and the speaker originally thought it was too big to be acquired, but now sees it as an ideal size for growth and agility.
• 😀 The speaker highlights PayPal's valuation of 9x earnings, noting that the company's growth potential makes it a strong buy despite its low multiple.
• 😀 The speaker’s account portfolio is at an all-time high, having gained around $400, and they aim for a 2% growth for the month.
• 😀 PayPal's valuation of 10x earnings is considered a rare and attractive investment opportunity, particularly for a company with a strong market moat.
• 😀 Elliot Management, led by Paul Singer, has a large position in PayPal, and the speaker praises the hedge fund’s impressive historical performance, often with low risk and steady returns.
• 😀 Elliot Management has made consistent gains over the years, with only a few down years, and has diversified strategies that include mergers, activism, and private equity investments.
• 😀 Despite not being a fan of PayPal's product, the speaker focuses on the financial metrics and growth potential, suggesting it is a solid investment.
• 😀 PayPal's $1.7 trillion in processed payments over the last four quarters grew by 7%, showcasing the company’s ongoing growth in the payments sector.
• 😀 The speaker acknowledges potential concerns with PayPal’s BNPL (Buy Now Pay Later) services but maintains that these are not the key focus for investors.
• 😀 The speaker briefly mentions other fintech companies like ViceServe and Plaid, suggesting that understanding PayPal's role in the broader payments landscape is crucial for evaluating it.

Q & A

What does the speaker think about the size of PayPal as a company?

The speaker believes that PayPal's current size, which is smaller than the $100 billion mark, is actually ideal. They suggest that being a smaller company might allow PayPal to be more nimble and agile in its operations, rather than being too large and lumbering.

Why is the speaker confident that PayPal is a good investment opportunity?

The speaker is confident in PayPal's potential due to its low valuation, with the company trading at around 10 times earnings. This, combined with PayPal's solid market position and growth potential, makes it a compelling investment, in the speaker's view.

What is the speaker's perspective on the risks of investing in PayPal?

The speaker acknowledges the potential risks of investing in PayPal, particularly related to how the company will grow in the future. However, they emphasize that PayPal has a strong market position, a good moat, and is unlikely to go out of business, making it a relatively low-risk investment.

Who is Elliot, and what role do they play in relation to PayPal?

Elliot is a major investor in PayPal, with a large position in the company. They are a prominent investment firm led by Paul Singer, known for their low-risk investment strategies and consistent returns. Elliot’s involvement in PayPal adds credibility to the company's potential.

What is the typical return of Elliot as a hedge fund?

Elliot's returns are generally modest but consistent, with annual returns ranging from 5% to 15% over the last few years. The hedge fund is known for its low-risk approach and a strategy that focuses on preserving capital while achieving steady gains.

What types of investments and strategies does Elliot employ?

Elliot employs a variety of investment strategies, including mergers and acquisitions (M&A), event-driven investments, activism, leveraged buyouts (LBOs), and private equity. Their approach is a mix of different financial tactics rather than focusing on one specific area.

What are the speaker's thoughts on PayPal's product?

The speaker does not particularly like PayPal's product but emphasizes that as an investor, the product's quality is not the key factor. Instead, they focus on PayPal's financial performance and market potential when making investment decisions.

How significant is PayPal's payment processing volume?

PayPal processed $1.7 trillion in payments over the past four quarters, which grew by 7%. This highlights the company's strong position in the payments industry and its consistent growth in transaction volume.

What is the speaker's view on the 'Honey' acquisition scandal?

The speaker dismisses the Honey scandal, stating that PayPal could easily write a check to cover the entire cost of the Honey acquisition. They suggest that the controversy is not significant enough to impact PayPal's overall investment potential.

What is the speaker's opinion on PayPal's competitors and other financial tech companies?

The speaker briefly mentions other financial technology companies, such as Affirm and Plaid, suggesting that while PayPal's competitors are noteworthy, PayPal’s overall position in the market remains strong. They also note the importance of understanding the broader payments ecosystem when evaluating PayPal.