Is PayPal Holdings Stock a Buy?

While there are no real winners in the COVID-19 pandemic, some companies are proving the merits of digital operations and growing their businesses at accelerated rates as families shelter-in-place and those employees who can work from home do so. PayPal Holdings (NASDAQ: PYPL) is a prime example. While incumbent digital payment processors Visa and Mastercard shares are still down by double-digit percentages from their all-time highs as they face a sharp near-term slowdown in growth, PayPal is surging to new all-time highs.

To be sure, PayPal's first quarter wasn't perfect. Revenue grew at a subdued 12% year-over-year pace, missing the guidance the company provided at the onset of the year. However, the second quarter is shaping up nicely. Some 7.4 million net new accounts were opened in April, and 15 million to 20 million net new active accounts are expected to be opened in the quarter, and payment volume and revenue increased 22% and 20%, respectively, in April.

It's clear that PayPal is doing its best to make lemonade of the lemons that the pandemic-battered economy has handed all businesses, and digital payments where a physical card isn't present are getting a boost. A single quarter -- or even a single year -- of stellar performance doesn't necessarily make a company a great long-term investment. Nevertheless, this leader in digital payments, peer-to-peer money movement, and e-commerce is investing heavily for growth, and that's yielding results.