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PayPal stock: undervalued in wake of freedom of speech fracas?


On October 10, PayPal [NASDAQ:PYPL] retracted their statement on fining users of PayPal’s service who promote ‘misinformation’, where PayPal would decide what will count as ‘misinformation’. This policy was going to take effect from 3 November, and a penalty of $2500 (about £2222) could be imposed for each violation.

After this ‘freedom of speech’ breaching policy, the shares of PayPal dropped as much as 5.3% to $85.43. The phrase ‘delete PayPal’ exploding to 1,392% on Google search. This issue attracted the attention of former leaders at the company, like David Marcus, the President of PayPal from 2012 -2014, who called this ‘insanity’ on Twitter. Co-founder Elon Musk replied ‘Agreed’ to Marcus’ tweet. After this scandal, is PayPal still undervalued enough for investors to grab the stock? In this article we take a closer look.

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. The company's payments platform allows consumers to send and receive payments in approximately 200 markets and in approximately 100 currencies, withdraw funds to their bank accounts in 56 currencies, and hold balances in their PayPal accounts in 25 currencies. PayPal Holdings was founded in 1998 and went public via an IPO in 2002. However, eBay soon acquired PayPal and operated it as a subsidiary until 2015.

In 2015, eBay made PayPal an independent publicly-traded company once again. PayPal's main office is located in the Silicon Valley hub of San Jose, California.

PayPal is primarily known for its payment-processing service of the same name. However, it has several other sizable consumer-facing businesses as well. These include its mobile wallet and payments unit Venmo, money transfer service Xoom, and its Honey rewards platform.

PayPal operates a two-sided payments network around the globe. Two-sided is easy to understand, PayPal has done extensive work to attract a great number of both seller and buyers, creating a network effect that generates more transactions. As both vendors and buyers already have their information stored in the system, it makes it easier to connect them for future transactions as well.

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