Investing behind particular trends, such as the fintech revolution, is a smart way for investors to gain exposure to specific areas of the economy that might have big potential. It's not necessarily difficult to find individual businesses that fit your criteria, but the challenge could lie in identifying companies selling at attractive valuations.

There's one incredibly cheap fintech stock, which trades 75% off its peak price, that investors should consider buying. Let's take a closer look at PayPal (NASDAQ: PYPL).

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Still growing

Before the pandemic and during the worst days of the health crisis, PayPal was growing very rapidly, increasing users, total payment volume (TPV), and sales at a remarkable clip. The popularity of online shopping in 2020 and 2021 certainly helped drive adoption of digital payments, benefiting this business. It's no wonder the stock hit its all-time high in July 2021.

Growth has slowed as economic conditions changed, which has sent shares lower in the past three years. But PayPal is still expanding at a healthy clip. In 2023, revenue increased 9%. And through the first nine months of this year, sales were up 8% year over year. This was boosted by ongoing TPV growth.

One area where PayPal has struggled is in bringing on more active accounts, which now total 432 million. While up 1% compared to the third quarter of 2023, that number is not much higher than it was almost three years ago.

However, the business has seen transactions per active account march higher, rising 9% in Q3. PayPal is holding on to its users that engage more with the platform, which is a positive sign.

Competitive strengths

PayPal has been around for over two decades, making it a clear leader in the fintech and payments markets. During that long period of time, the business has certainly developed some key competitive strengths, which is yet another reason to consider buying shares.

One obvious advantage PayPal has is its network effects. Bringing on more merchants or more consumers immediately makes the service more valuable to everyone. There are more potential customers for merchants to target, as well as more places to spend money for shoppers.

With annual run-rate TPV of $1.7 trillion, there is no question that PayPal has tremendous scale that creates another advantage. There are large fixed costs and investments needed in creating a payment platform. Once it gets to a certain size, the profits can be high. PayPal expects to generate $6 billion in free cash flow this year. If there are any subscale rivals out there, they are likely struggling to cover their large expenses, not raking in cash profits like this.