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PayPal Stock Near 52-Week Low: What’s Next?
Stock Analysis & Ideas

PayPal Stock Near 52-Week Low: What’s Next?

After 2020’s record performance, it hasn’t been smooth sailing for the financial technology company PayPal (PYPL). 

Though businesses of all sizes continue to go digital, providing a solid runaway for PayPal’s growth, factors such as eBay’s (EBAY) payments migration, normalization in growth rate amid economic reopening, and tough comparisons remain a drag on Paypal.

Adding to shareholders’ pain, management adopted a cautious stance, saying it expects retail supply chain disruptions and labor market concerns to take a toll on holiday sales, and in turn, the company’s performance. Owing to the headwinds, PayPal expects to post revenues of $6.85 billion to $6.95 billion in Q4, compared to Wall Street’s estimate of $7.24 billion. Meanwhile, its Q4 adjusted earnings guidance of $1.12 per share lags the Street’s estimate of $1.27.

The moderation in growth rate and lower-than-expected guidance have led to a significant decline in PayPal stock. It’s worth noting that PayPal stock has lost nearly 22% in value in the past month and is trading near its 52-week low. 

Furthermore, PayPal stock is down about 19.7% on a year-to-date basis, falling way behind the Nasdaq composite index. 

What’s Next for Paypal?

Although PayPal stock underperformed the benchmark index, its core business remains strong. During the Q3 conference call, PayPal CFO John Rainey stated that the company’s core business is performing well. 

Rainey added that consumer engagement increased 20% in Q3 (excluding eBay). This is important, as improving engagement levels drive active account numbers by reducing churn rate. Further, its total payments volume and transaction revenue (both excluding eBay) remained strong in Q3, despite tough year-over-year comparisons, indicating strength in the core business.

With PayPal benefitting from the ongoing momentum in its core business, its CEO, Dan Schulman, expects top-line growth to accelerate in 2022 and sees supply-chain and labor concerns as temporary headwinds.

Another interesting piece of data that is worth looking at is investors’ growing confidence in PayPal stock. TipRanks’ Stock Investors tool indicates that about 11.4% of the investors who hold portfolios on TipRanks have increased their exposure to PayPal stock in the last 30 days.

Further, its partnership with Amazon (AMZN), foray into the high-growth buy now pay later (BNPL) vertical, and expansion of its merchant network bode well for future growth and keep me bullish. 

Wall Street’s Take

As PayPal stock lost a fair amount of value, UBS analyst Rayna Kumar sees this as a buying opportunity and initiated coverage on PYPL with a Buy rating. Along with Kumar, the majority of the analysts maintain a favorable outlook on PayPal stock. 

On TipRanks, PayPal has received 24 Buys, 5 Holds, and 1 Sell, for a Strong Buy consensus rating. Moreover, PayPal scores an 8 out of 10 from TipRanks’ Smart Score rating system, implying it will likely outperform the market averages.

See Top Smart Score stocks >>

The average PayPal price target of $276.04 implies 46.8% upside potential to current levels.

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

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