The real value of companies does not change so fast. But riding out the volatility is the price we have to pay to get long-term gains.
Owning a piece of high-quality companies with real advantages and tons of growth certainly helps. PayPal Holdings is one such company that you should consider to lower your concern during market turmoil.
Big success and competitive advantages
PayPal is among the largest online payment platforms out there. Since it came into the markets after its spinoff from eBay in 2015, the stock has been a big winner, increasing over 700%. Its user base was at 169 million accounts as of 2015; today, that has grown to an incredible 392 million. Through the first quarter this year, the firm has increased revenue at a growth of 18.8% over the previous five years, while net has grown even quicker, at a yearly rate of 31.3%.
When the company does go through rough patches, its strong advantages can ease investor worries. The company has two sources of such strength.
First, its double platform of consumers and merchants creates a powerful network lock in. Merchants will use PayPal if there are already many consumers who want to pay using the service, and vice versa. This means that with more customers, the ecosystem gets bigger. As the business gets momentum, it’s very hard for competitors to challenge this network effect.
Second, the company’s success can also be connected to intangible assets, like its brand and innovation. Consumers and merchants understand that whenever they use PayPal, they are gaining top-notch security. Users therefore trust it with their credit card details and payment needs, and that is crucial.
Hold on and wait
Whenever the stock market looks to be losing and other people are panicking, it’s a good strategy to stick to owning top-rate businesses with a long-term goal. PayPal’s impressive history of success, continued growth, and other advantages make it the perfect choice for investors during any downturn.
Author: Blake Ambrose