I believe Paypal is going to buy back $10+ billion in shares or 14% of the company over the next 6-10 months at this price and they can and this is how.
—It's market cap is $68 billion today, Back to 2017 valuations.
—They are authorized to buy back 19% of the entire company at $12.8 Billion dollars which is left on the buyback authorization approved last fall that never expires.
—They hold $9.9 Billion in cash, $14.54 Billion in total on hand liquidity+ $1.8 Billion from the BNPL sell to KKR which will be used to buyback shares they said and will make Q3 FCF skyrocket as it was deferred so a total of —$16.34 Billion on hand liquidity. Or 24.6% of their entire market cap.
— In Q2, they completed $1.5 million in share repurchases. For the full year, they now expect to allocate approximately $5 billion to their buyback program but managements job is to boost ROE and the best way is to buyback shares at record low prices.
—Their recently announced credit externalization will help optimize their balance sheet and improve their capital efficiency.
—“Given our desire to return capital to shareholders and the confidence we have in our business, we've taken a more aggressive approach to share repurchases. Since the end of 2021, our diluted share count has declined 6%.”
—“Share repurchases under our stock repurchase programs may be made through open market transactions, block trades, privately negotiated transactions including accelerated share repurchase agreements or other means at times and in such amounts as management deems appropriate, and will be funded from our working capital or other financing alternatives.”
The saying is true “Low Prices Cure Low Prices” Chart looks just like Meta last year.
— Paypal makes 26% of meta's FCF but worth only 8.6% of what meta is worth.
— Paypal makes almost double Nvidias FCF but is worth 6.7% of Nvidias worth.
Paypal today is beyond deep value with its little risk and is the lowest price to discounted cash of the future. I have never seen such a mispriced opportunity in the market.
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