PayPal Holdings Inc.

The stable outlook reflects S&P Global Ratings' expectation that PayPal will sustain its strong franchise while operating with low leverage (well below 1.5x) in the next two years. While we expect the company to expand its loan book, we think incremental loan loss provisions will be manageable and won't materially hurt its financial risk. We could lower the ratings if leverage approaches 1.5x--for example because of a very large acquisition--or if the loan book and associated credit losses grow much faster than we expect. We could also lower the ratings if the company suffers unexpected operational or reputational problems. We view an upgrade as remote in the next 24 months. S&P Global Ratings economists expect the U.S. economy to grow

...PayPal Holdings Inc. operates one of the largest online payment systems and digital payment platforms globally. It facilitates online payments in more than 100 different currencies in more than 200 markets worldwide. PayPal benefits from strong long-term growth prospects in online and digital payments, although growth has normalized following a surge earlier in the pandemic. Customers worldwide are moving away from cash and checks, increasing demand for online and digital payments provided by PayPal. The end of the exclusive relationship with eBay has hampered PayPal's earnings more than we had initially anticipated. Although it represented 6% of PayPal's total revenue share in 2021, its impact on margins was higher. In our view, the phasing out of the partnership may cost PayPal 5 percentage points to 10 percentage points of the annual net revenue growth through 2022, but we still expect growth to remain close to 10% per annum. PayPal operates with below-average profitability versus FMI...

Full Report