New Trade: Long Paypal (PYPL) & Short IAC Interactive (IAC)

By: ispeculatornew
Date posted: 06.21.2017 (5:53 am) | Write a Comment  (0 Comments)

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Today I am opening my 12th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
IACIAC/InterActiveCorp102.9636.9824.3261.09-2.824.523.511.138/2/201739.233.7833.02
PYPLPayPal Holdings Inc52.5244.0524.9334.117.244.3312.231.187/20/20178.96N/AN/A

Revenue growth for IAC has come down quite a bit and I do think that PYPL will be able to keep up its current growth in the short to medium term.

 

Long Paypal (PYPL)

Paypal is a very interesting story right now. Not only does its main business participate in the growth of ecommerce and online payments but it also owns Venmo, an incredibly popular P2P payment solution. Paypal has been in the news a lot recently as the big ecosystem players continue to take stabs at its main business. Just recently, Apple announced it would be possible to do P2P payments through Apple Pay using iMessage which does sound like a big threat. I do think it is and I continue to believe Paypal will struggle to remain dominant against these much bigger players. The threat does seem a bit overblown at this point though and I do think PYPL will continue to do well in the short to medium term. Why? Because online payments are a very fast growing business and more than one player will do well so I think PYPL is very well positioned.

 

Next earnings: July 20th 2017


Short IAC Interactive (IAC)

IAC Interactive continues to be an interesting stock to follow but to me the main story remains that IAC has struggled to come up with the next big thing which has translated into slower revenue growth. The stock did see solid acceleration and that has been mainly caused by improved profits but as you can imagine, that will be more difficult to sustain without better top line growth.

 

Next earnings: August 2nd 2017

Disclaimer: Prior to opening this trade, I do not hold a position in PYPL or IAC
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