Hey there,
Yeah, Paypal is certainly cheap when compared to historical valuations. It doesn't really matter which metric you are looking at, it is trading at close to a 50% discount to historical valuations. However, we have to remember something. In this environment, there has been a clear valuation reset for companies in the tech industry - payment processors in particular. It's not unique to PYPL. Others in the industry like SQ (Block - formerly Square) as well as NVEI and LSPD here in Canada have taken massive hits as well.
Today, the company is trading at 26 times earnings and 2.5 times sales. For a company still expected to grow at a mid-teens pace - this isn't all that bad. In fact, when you check out valuations on a forward basis - it looks even better. The company is trading at only 11x forward earnings and as you pointed out, has a PEG ratio below one. This is a sign that the company's share price is not keeping up with expected growth rates. The key factor here, is whether will PYPL achieve this level of growth? It's already guided down a couple of times this year so it appears the company is feeling the pinch - especially with respect to margins. Lower consumer spending will lead to lower transactions for PYPL and thus, result in continued margin pressures.
All this said - the company is still growing at a decent clip despite the current macro environment and I believe the sell-off is a little overdone. Paypal is profitable and generates better cash flow than the aforementioned payment processors. There are certainly risks here but if the company delivers on expected growth rates, the company is well-priced.
Mat