Copyright © FactSet Research Systems Inc. Fundamental company data and analyst estimates provided by FactSet. International stock quotes are delayed as per exchange requirements. stock quotes reflect trades reported through Nasdaq only comprehensive quotes and volume reflect trading in all markets and are delayed at least 15 minutes. In my opinion, we might just be witnessing Paypal’s transition from a growth to value stock.Stocks: Real-time U.S. While this sell-off could be interpreted as a sign of waning investor faith in Paypal, I believe that these shortfalls are simply part of PayPal’s transition to a larger and more complex system. Overall, Paypal has been one of the most reliable payment services for many years, and its position as a leader in the financial technology space is still undisputed. While the bear case does indeed carry some weight, I do think that a 80% sell-off for a company that’s still fundamentally strong is indeed a bit of an overreaction. Why I bought Paypal despite all the above Hence any accumulation at such levels may not necessarily be seen as catching a falling knife. If any hope at all, we are seeing the two moving averages tighten which is usually an indication of more bullish action to come. Unfortunately, the moving averages are indeed looking very bearish as not only do we have the absence of a golden cross (which many other tech stocks have already seen of late), we have the 200 Day Moving average (Blue Line) acting as somewhat of a strong resistance level for the stock given that the price action has failed to break above this point twice in recent time (Orange Circles). Paypal hasn’t broken above moving averages yet In my opinion, I believe that accumulating this stock at $60 puts the risks in my favor given that I do not think the stock will reach those $45-$50 levels hence the only way from here is up (hopefully). This suggests that there could be further downside to come given that the next key support level would be at about $45-50 (Indicated in Green). The Price Action of Paypal is indeed showing mixed signals as they recently broke their key support level of $70 (Indicated in Red). Technical Analysis of Paypal Paypal broke below key support recently In addition to this, we also see Paypal lose market share to Stripe in reference to Amazon’s long-standing partnership with Stripe. This is indeed prevalent when we look at companies such as Apple and Google who have both developed their own payment gateways. In recent times, we’ve seen the emergence of companies pivoting away from “subcontracting” their payment gateways to building payment gateways of their own. “Some people, believe it or not, even went back to cash.” – CNBC 2) Increased Competition in the Payment Space “As the lockdowns subsided, people went back to in-person spending,” explained Gabriele. In the case of Paypal they took the brunt of this more than other companies as not only did consumers spend less, consumers also started spending more offline. The same narrative is seen across all industries where consumer spending has decreased all for the same reasons that we know it to be Inflation, Recessionary Fears & Job Losses. In my research, I’ve managed to narrow down their declining fundamentals to just 2 reasons, 1) Decrease in Discretionary Spending
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