PayPal (PYPL) Slid after a Strong 2024

Sound Shore Management, an investment management firm, has released its investor letter for the first quarter of 2025. A copy of the letter can be downloaded here. The fund’s Investor Class (SSHFX) and Institutional Class (SSHVX) declined 1.93% and 1.89% respectively, in the first quarter of 2025 compared to a 2.14% return for the Russell 1000 Value Index (Russell Value) and -4.27% return for the Standard & Poor 500 Index (S&P 500). Sound Shore’s 35-year annualized returns were 10.13% and 10.41% for SSHFX and SSHVX, respectively, as of March 31, 2025, and were ahead of the Russell Value at 9.81% and trailed the S&P 500 at 10.56%. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Sound Shore Management highlighted stocks such as PayPal Holdings, Inc. (NASDAQ:PYPL). PayPal Holdings, Inc. (NASDAQ:PYPL) is a technology platform that enables digital payments. The one-month return of PayPal Holdings, Inc. (NASDAQ:PYPL) was 6.90%, and its shares gained 13.32% of their value over the last 52 weeks. On May 23, 2025, PayPal Holdings, Inc. (NASDAQ:PYPL) stock closed at $69.85 per share with a market capitalization of $67.931 billion.

Sound Shore Management stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q1 2025 investor letter:

"Along with concerns about a slowing economy and consumer spending, holdings PayPal Holdings, Inc. (NASDAQ:PYPL) and Disney fell after strong finishes to 2024, despite both having very solid balance sheets. Notwithstanding the economic worries, each has internal change that is driving improved profitability. PayPal is a digital and mobile payments pioneer that we were able to add to the portfolio in the third quarter of 2024 when it was trading below normal at 16 times earnings. A new management team, led by Intuit veteran Alex Chris, has targeted improvements in product and pricing to help drive margins higher. With $5.5 billion in net cash on the balance sheet, including long-term investments, the company is buying approximately 6% of the outstanding shares annually and PayPal remains a full position."

PayPal Holdings, Inc. (NASDAQ:PYPL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 92 hedge fund portfolios held PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of the first quarter which was 94 in the previous quarter. While we acknowledge the potential of PayPal Holdings, Inc. (NASDAQ:PYPL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered PayPal Holdings, Inc. (NASDAQ:PYPL) and shared billionaire Cliff Asness' stock picks with huge upside potential. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.