The Pullback in PayPal May be a Buy Opportunity

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Traders work on the floor of the NYSE in New York

Keep an eye on the PayPal pullback.

After racing from a low of $87 in early 2020 to a high of $309.48, the stock fell to a recent low of $204.58.  All thanks to its consumer spending concerns, and poor 2022 guidance.  For example, the company said fiscal 2022 revenue would increase about 18%, which would equal full-year sales of about $30 billion.  Analysts were looking for $31.6 billion.

For Q4, the company sees $6.85 billion to $6.95 billion in revenue and $1.12 in adjusted EPS, as compared to expectations for revenue of $7.24 billion and adjusted EPS of $1.28.

“We are seeing the impact of global supply chain shortages in our merchant base, consumer confidence is weakened with the absence of stimulus payments, and with the economy reopening, more people may be likely to do their holiday shopping in-store,” PayPal CEO Dan Schulman said, as quoted by CNBC.

However, with the pullback from $304.08 becoming overkill, keep an eye on the stock.

Even the pile-on of lowered price targets is overdone.

  • Citi lowered its target to $300 from $350
  • RBC Capital lowered its target to $298 from $322
  • Baird lowered its target. To $290 from $325
  • Deutsche Bank lowered its from $360 to $260
  • Susquehanna lowered its from $360 to $310
  • KeyBanc lowered its target from $335 to $325
  • Credit Suisse lowered its from $315 to $280
  • JP Morgan lowered from $318 to $272
  • DA Davidson lowered from $325 to $275

With a great deal of negativity priced in, we could see a near-term bounce.  Plus, if PYPL can hold $204.58, the excessively oversold stock could rally back to its 50-day moving average around $261.09, near-term.  We’re just waiting for the weak hands to leave.