PayPal stock has been one of the biggest winners of 2020, but investors are starting to cool off on the stock after its latest earnings report.

That's a huge mistake.

This is one of the most innovative companies on the market, and the sky is the limit for this tech stock.

PayPal Holdings Inc. (Nasdaq: PYPL) reported its third-quarter results after the market close on Monday, and just like eight of the past nine quarters, it beat on both earnings per share (EPS) and revenue. It had record revenue of $5.46 billion, up almost 25% year over year, and saw EPS of $0.86 up roughly 100% over the same time period.

But the initial reaction from investors was lackluster. The stock was down over 5% after reporting earnings, and while it tried to recover during the day, there were just not enough buyers.

The big reason for this drop was that PayPal didn't raise full-year guidance as much as anticipated and was quiet on its 2021 outlook.

Like many other companies, PayPal is also seeing ongoing pandemic-related weakness in travel and entertainment spending, along with declines in its lending business.

These are no doubt headwinds to the business and issues that many investors fear could have a major impact on PayPal's business.

But I see a different picture.

I see this as a buying opportunity in a transformational business.

Here's why…

Why PayPal Stock Is a Buy Now

Part of my investment process is to always look at the big picture. PayPal has a bright future in front of it, making it one of the best stocks to buy. Looking past the short-term distractions, the moves that it made this year help to solidify my bullish position.

PayPal isn't a simple payments platform owned by eBay Inc. (Nasdaq: EBAY) anymore. It is one of the largest payment processors in the world. During last quarter, it processed $247 billion in payments, 36% above the same quarter last year.

This number isn't any surprise to me when you see how many people are on PayPal. It ended the quarter with 361 million active accounts and approximately 28 million merchant accounts. This is a big part of the reason why I am bullish on PayPal. While some of these customers may only use one or two of its products, it is constantly introducing new features and getting users to spend more time on the platform.

Just this year, PayPal has started to roll out big new products like installment lending, bill payment, and the ability to buy, sell, and hold cryptocurrency. That's a huge move for its over 300 million users. For a company this size, it's impressive how many new products it is adding.

The move to handle cryptocurrency could be one of the biggest moves ever by PayPal.

Only a few short years ago, it was freezing accounts involved in the space, and now it is diving in headfirst by allowing its users to make purchases at 28 million merchants around the world. This could increase engagement from a sizeable user base and put pressure on Square Inc. (NYSE: SQ), one of its biggest competitors that has been offering cryptocurrency services since 2018.

Just to give you an idea of how big cryptocurrency could be for PayPal, look at its competition. Coinbase, a digital currency exchange, has 35 million users. And Square's last quarterly report showed 600% year-over-year growth in Bitcoin-related revenue, taking in $875 million.

Other additions like the Venmo credit card will also help to keep users on its platform. Venmo already has 65 million users spending $44.3 billion in the quarter. Adding a credit card is a natural extension and comes with features never seen before. It will have a personalized QR code directly on the card as well as a contactless chip for touchless payments.

As I zoom out and look at the big picture, PayPal has a long way to go. Whether it is adding more services to Venmo or integrating acquisitions like Honey, it hasn't stopped innovating. This is why I continue to be bullish on PayPal.