Offshore
Video
Startup Archive
Baiju Bhatt on raising Robinhood’s seed round and being rejected over 70 investors
Baiju Bhatt and Vlad Tenev were five years into their entrepreneurial journey when they came up with the idea for Robinhood.
As Baiju puts it:
“We had been entrepreneurs for the better part of five years and didn’t have a whole lot to show for it.”
And when they tried raising seed funding for it, they were rejected by somewhere between 70 and 110 investors.
These investors told the founders all the reasons Robinhood would fail — “no one wants to trade stocks from their phones,” “you didn’t know how to build consumer products,” “there’s a ton of other brokerage products out there people can use.”
Baiju reflects on this experience:
“There were a lot of no’s and it was very difficult back then. But over time I learned to channel it and use it as positive motivation.”
Then Baiju and Vlad finally caught a break when prominent venture capitalist Tim Draper decided to take a chance on them. Initially however, Draper said no because he didn’t think they’d be able to secure a broker-dealer license and the founders were paying themselves ~$70k salaries:
“Great idea, but it’s never going to happen, and you guys are paying yourselves too much,” he said.
The founders left the meeting confused — they could barely make rent and pay back their student loans with what they were paying themselves. But then they got an idea:
“We’ll tell him that we’re not going to pay ourselves until we get this approval.”
Draper said yes, and the Robinhood founders got to work on building a company that is today worth almost $50 billion.
Video source: @ThePeelPod @TurnerNovak (2025)
tweet
Baiju Bhatt on raising Robinhood’s seed round and being rejected over 70 investors
Baiju Bhatt and Vlad Tenev were five years into their entrepreneurial journey when they came up with the idea for Robinhood.
As Baiju puts it:
“We had been entrepreneurs for the better part of five years and didn’t have a whole lot to show for it.”
And when they tried raising seed funding for it, they were rejected by somewhere between 70 and 110 investors.
These investors told the founders all the reasons Robinhood would fail — “no one wants to trade stocks from their phones,” “you didn’t know how to build consumer products,” “there’s a ton of other brokerage products out there people can use.”
Baiju reflects on this experience:
“There were a lot of no’s and it was very difficult back then. But over time I learned to channel it and use it as positive motivation.”
Then Baiju and Vlad finally caught a break when prominent venture capitalist Tim Draper decided to take a chance on them. Initially however, Draper said no because he didn’t think they’d be able to secure a broker-dealer license and the founders were paying themselves ~$70k salaries:
“Great idea, but it’s never going to happen, and you guys are paying yourselves too much,” he said.
The founders left the meeting confused — they could barely make rent and pay back their student loans with what they were paying themselves. But then they got an idea:
“We’ll tell him that we’re not going to pay ourselves until we get this approval.”
Draper said yes, and the Robinhood founders got to work on building a company that is today worth almost $50 billion.
Video source: @ThePeelPod @TurnerNovak (2025)
tweet
Offshore
Photo
Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $PYPL 🧘🏽♂️
•NTM P/E Ratio: 18.75x
•All-Time Mean: 29.34x
•NTM FCF Yield: 7.31%
•All-Time Mean: 5.12%
As you can see, $PYPL appears to be trading below fair value
Going forward, investors can receive ~56% MORE in earnings per share & ~42% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $PYPL is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $11.92B
•Long-Term Debt: $9.98B
$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 16.6%
RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.2%
$PYPL has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $17.77B
•2024E: $31.71B
•CAGR: 12.27%
FREE CASH FLOW❌*
•2019: $3.86B
•2024E: $6.09B
•Decrease: 9.37%
NORMALIZED EPS✅
•2019: $3.10
•2024E: $4.59
•CAGR: 8.16%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 1.20B
•LTM Shares Outstanding: 1.06B
By reducing its shares outstanding by 11.6%, $PYPL increased its EPS by 13.1% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 40.1%
•LTM Operating Margins: 17.7%
•LTM Net Income Margins: 14.1%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~56% MORE in EPS & ~42% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 9.38% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be greater than the (9.38%) required growth rate:
2024E: $4.59 (-10.1% YoY) *FY Dec
2025E: $4.90 (6.9% YoY)
2026E: $5.47 (11.7% YoY)
2027E: $6.35 (16.0% YoY)
$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2027 with $6.35 in EPS & see its CAGR potential assuming different multiples
21x P/E: $133.35💵 … ~15.8% CAGR
20x P/E: $127.00💵 … ~13.9% CAGR
19x P/E: $120.65💵 … ~11.9% CAGR
18x P/E: $114.30💵 … ~9.8% CAGR
As you can see, $PYPL appears to have attractive return potential if we assume >19x earnings & aggressive return potential if we assume >20x earnings
The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption
Everyone wanted $PYPL when it traded 50x earnings, not many wanted it when it traded for 12x earnings ☯️
There’s STILL negative sentiment around $PYPL and this sentiment is already being changed as management continues to make good progress
Today at $87💵 $PYPL still appears to be a good consideration for investment (albeit, with some turnaround / competitive risks & a smaller margin of safety)
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭[...]
A quality valuation analysis on $PYPL 🧘🏽♂️
•NTM P/E Ratio: 18.75x
•All-Time Mean: 29.34x
•NTM FCF Yield: 7.31%
•All-Time Mean: 5.12%
As you can see, $PYPL appears to be trading below fair value
Going forward, investors can receive ~56% MORE in earnings per share & ~42% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $PYPL is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $11.92B
•Long-Term Debt: $9.98B
$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 16.6%
RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.2%
$PYPL has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $17.77B
•2024E: $31.71B
•CAGR: 12.27%
FREE CASH FLOW❌*
•2019: $3.86B
•2024E: $6.09B
•Decrease: 9.37%
NORMALIZED EPS✅
•2019: $3.10
•2024E: $4.59
•CAGR: 8.16%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 1.20B
•LTM Shares Outstanding: 1.06B
By reducing its shares outstanding by 11.6%, $PYPL increased its EPS by 13.1% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 40.1%
•LTM Operating Margins: 17.7%
•LTM Net Income Margins: 14.1%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~56% MORE in EPS & ~42% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 9.38% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be greater than the (9.38%) required growth rate:
2024E: $4.59 (-10.1% YoY) *FY Dec
2025E: $4.90 (6.9% YoY)
2026E: $5.47 (11.7% YoY)
2027E: $6.35 (16.0% YoY)
$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2027 with $6.35 in EPS & see its CAGR potential assuming different multiples
21x P/E: $133.35💵 … ~15.8% CAGR
20x P/E: $127.00💵 … ~13.9% CAGR
19x P/E: $120.65💵 … ~11.9% CAGR
18x P/E: $114.30💵 … ~9.8% CAGR
As you can see, $PYPL appears to have attractive return potential if we assume >19x earnings & aggressive return potential if we assume >20x earnings
The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption
Everyone wanted $PYPL when it traded 50x earnings, not many wanted it when it traded for 12x earnings ☯️
There’s STILL negative sentiment around $PYPL and this sentiment is already being changed as management continues to make good progress
Today at $87💵 $PYPL still appears to be a good consideration for investment (albeit, with some turnaround / competitive risks & a smaller margin of safety)
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭[...]
Offshore
Dimitry Nakhla | Babylon Capital® A quality valuation analysis on $PYPL 🧘🏽♂️ •NTM P/E Ratio: 18.75x •All-Time Mean: 29.34x •NTM FCF Yield: 7.31% •All-Time Mean: 5.12% As you can see, $PYPL appears to be trading below fair value Going forward, investors…
𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
tweet
tweet
Offshore
Photo
Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $PYPL 🧘🏽♂️
•NTM P/E Ratio: 18.75x
•All-Time Mean: 29.34x
•NTM FCF Yield: 7.31%
•All-Time Mean: 5.12%
As you can see, $PYPL appears to be trading below fair value
Going forward, investors can receive ~56% MORE in earnings per share & ~42% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $PYPL is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $11.92B
•Long-Term Debt: $9.98B
$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 16.6%
RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.2%
$PYPL has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $17.77B
•2024E: $31.71B
•CAGR: 12.27%
FREE CASH FLOW✅
•2019: $3.86B
•2024E: $6.09B
•CAGR: 9.37%
NORMALIZED EPS✅
•2019: $3.10
•2024E: $4.59
•CAGR: 8.16%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 1.20B
•LTM Shares Outstanding: 1.06B
By reducing its shares outstanding by 11.6%, $PYPL increased its EPS by 13.1% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 40.1%
•LTM Operating Margins: 17.7%
•LTM Net Income Margins: 14.1%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~56% MORE in EPS & ~42% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 9.38% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be greater than the (9.38%) required growth rate:
2024E: $4.59 (-10.1% YoY) *FY Dec
2025E: $4.90 (6.9% YoY)
2026E: $5.47 (11.7% YoY)
2027E: $6.35 (16.0% YoY)
$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2027 with $6.35 in EPS & see its CAGR potential assuming different multiples
21x P/E: $133.35💵 … ~15.8% CAGR
20x P/E: $127.00💵 … ~13.9% CAGR
19x P/E: $120.65💵 … ~11.9% CAGR
18x P/E: $114.30💵 … ~9.8% CAGR
As you can see, $PYPL appears to have attractive return potential if we assume >19x earnings & aggressive return potential if we assume >20x earnings
The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption
Everyone wanted $PYPL when it traded 50x earnings, not many wanted it when it traded for 12x earnings ☯️
There’s STILL negative sentiment around $PYPL and this sentiment is already being changed as management continues to make good progress
Today at $87💵 $PYPL still appears to be a good consideration for investment (albeit, with some turnaround / competitive risks & a smaller margin of safety)
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮[...]
A quality valuation analysis on $PYPL 🧘🏽♂️
•NTM P/E Ratio: 18.75x
•All-Time Mean: 29.34x
•NTM FCF Yield: 7.31%
•All-Time Mean: 5.12%
As you can see, $PYPL appears to be trading below fair value
Going forward, investors can receive ~56% MORE in earnings per share & ~42% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $PYPL is a good business
BALANCE SHEET✅
•Cash & Short-Term Inv: $11.92B
•Long-Term Debt: $9.98B
$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 16.6%
RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.2%
$PYPL has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $17.77B
•2024E: $31.71B
•CAGR: 12.27%
FREE CASH FLOW✅
•2019: $3.86B
•2024E: $6.09B
•CAGR: 9.37%
NORMALIZED EPS✅
•2019: $3.10
•2024E: $4.59
•CAGR: 8.16%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 1.20B
•LTM Shares Outstanding: 1.06B
By reducing its shares outstanding by 11.6%, $PYPL increased its EPS by 13.1% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 40.1%
•LTM Operating Margins: 17.7%
•LTM Net Income Margins: 14.1%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~56% MORE in EPS & ~42% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 9.38% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be greater than the (9.38%) required growth rate:
2024E: $4.59 (-10.1% YoY) *FY Dec
2025E: $4.90 (6.9% YoY)
2026E: $5.47 (11.7% YoY)
2027E: $6.35 (16.0% YoY)
$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2027 with $6.35 in EPS & see its CAGR potential assuming different multiples
21x P/E: $133.35💵 … ~15.8% CAGR
20x P/E: $127.00💵 … ~13.9% CAGR
19x P/E: $120.65💵 … ~11.9% CAGR
18x P/E: $114.30💵 … ~9.8% CAGR
As you can see, $PYPL appears to have attractive return potential if we assume >19x earnings & aggressive return potential if we assume >20x earnings
The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption
Everyone wanted $PYPL when it traded 50x earnings, not many wanted it when it traded for 12x earnings ☯️
There’s STILL negative sentiment around $PYPL and this sentiment is already being changed as management continues to make good progress
Today at $87💵 $PYPL still appears to be a good consideration for investment (albeit, with some turnaround / competitive risks & a smaller margin of safety)
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮[...]
Offshore
Dimitry Nakhla | Babylon Capital® A quality valuation analysis on $PYPL 🧘🏽♂️ •NTM P/E Ratio: 18.75x •All-Time Mean: 29.34x •NTM FCF Yield: 7.31% •All-Time Mean: 5.12% As you can see, $PYPL appears to be trading below fair value Going forward, investors…
𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
tweet
tweet
Offshore
Photo
Stock Analysis Compilation
Greystone Capital Management on Natural Resource Partners (NRP) $NRP US
Thesis: Natural Resource Partners is a resilient coal royalty business with strong free cash flow, effective management, and an attractive valuation, benefiting from a unique low-cost structure that enables consistent profitability regardless of market fluctuations.
(Extract from their Q4 letter)
tweet
Greystone Capital Management on Natural Resource Partners (NRP) $NRP US
Thesis: Natural Resource Partners is a resilient coal royalty business with strong free cash flow, effective management, and an attractive valuation, benefiting from a unique low-cost structure that enables consistent profitability regardless of market fluctuations.
(Extract from their Q4 letter)
tweet
Offshore
Photo
Dimitry Nakhla | Babylon Capital®
Despite a -22% decline over the past 6 months, $DHR stock continues to trade at a substantial premium relative to its projected growth rate
While $DHR is a great business, I’d want to see it trade for ~26x ($194💵) before considering it for investment https://t.co/VBEubHUK1w
tweet
Despite a -22% decline over the past 6 months, $DHR stock continues to trade at a substantial premium relative to its projected growth rate
While $DHR is a great business, I’d want to see it trade for ~26x ($194💵) before considering it for investment https://t.co/VBEubHUK1w
tweet