The last six months of 2021 have not been kind to investors in PayPal (NASDAQ:PYPL) stock.

From its peak closing price of $310.16 per share, PYPL stock has dipped nearly 40% (39.8% as of this writing) and now sits at $186.54.  

Investors have some reason to believe that PYPL stock was overvalued. For example, investors are becoming concerned that PayPal’s supremacy in digital payment solutions is being successfully eroded by competition.  

Also, the company’s long-anticipated breakup with eBay (NASDAQ:EBAY) reached its conclusion in June. This was really a case of two companies that are moving in different directions.

As Dana Blankenhorn points out, PayPal is now a “fully grown banking operation.” Although the company delivered a solid first earnings report with significantly reduced eBay revenue, investors may be concerned about two consecutive quarters of slowing growth.  

The company is also facing questions about the consumer protections (or lack thereof) in its push into the buy now pay later (BNPL) arena.

Specifically, the Consumer Financial Protection Bureau (CFPB) is  looking into how PayPal and other BNPL companies may be using user data and how these companies may be getting around existing consumer protection laws.  

That’s a lot for investors to process. As a company still recognized as part of the technology sector, PayPal faces the same headwinds that all tech stocks are enduring. 

With that said, the sell-off in PayPal looks overdone. And that’s why opportunistic investors should consider PYPL stock a solid choice as they look ahead to 2022. 

The Business Model is Sound 

The biggest reason I believe that the sell-off in PayPal is overdone is that none of the issues mentioned above changes the overall narrative for PayPal. The company remains one of the unquestioned leaders in the digital payment sector. In fact, it has an enviable market penetration rate of around 75%.  

And, as its recent partnership with Amazon (NASDAQ:AMZN) shows, it has no problem adding clients to its roster. Specifically, starting in 2022 Amazon will offer the Venmo payment option at checkout on its webpage as well as the Amazon shopping app.  

Another reason to be bullish about PYPL stock can be found in the company’s financials.

In the first three quarters of 2021, PayPal has reported revenue of $18.45 billion. That’s 13% higher on a year-over-year basis and puts the company well on pace to eclipse the $21.46 billion in revenue it recorded in all of FY 2020.

The company is forecasting revenue to come in at $25.36 billion. And a similar story is on display with the company’s earnings which are up 17% on a year-over-year basis.  

Looking ahead to 2022, PayPal estimates its revenue will increase 18%. That’s slightly less than the 19% analysts were forecasting. That isn’t the growth of a struggling company.   

If you’re a fan of free cash flow (FCF) as a metric of financial health, you should pay attention to what Mark Hake recently wrote about how PayPal’s strong FCF makes the stock an undervalued option.  

PYPL Stock Is a Clear Buy-the-Dip Candidate 

If you don’t buy into that from a technical standpoint, consider the reaction of the analyst community. Since PayPal reported earnings, at least 20 analysts have lowered their price target for PYPL stock. However, it’s important to note that in every case the new price target is higher than the stock’s current price.  

As any investor knows, that doesn’t mean that PYPL stock doesn’t have further to drop. Investors will do what they want. However, it does seem that the stock has absorbed all the bad news.  

PayPal needs a bullish catalyst, and that might come when it reports earnings at the beginning of February. That’s a long winter’s night away, but it shouldn’t stop you from opening or adding to your position in PYPL stock.  

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.