If you look at $PYPL weekly chart, you’ll notice the following;
1. MACD and RSI have NEVER been this stretched to the downside
2. The chart looks worse than it looked back in 2020 as Covid hit the markets
3. 150D EMA is support?
then you’ll think to yourself, WTF is going on
3 linked trades
I've been looking into this more and I agree, this seems poised to revert to the mean. (back up).
The negative sentiment seems to be around the idea that most e-commerce companies will either develop their own online payment processing businesses to cut out the middlemen, or partner with 'buy now, pay later' companies that make the checkout process as frictionless as PayPal does. Or Partner with Stripe or Square. A decline in PayPal's revenue growth rates and lower free cash flow margin poses risks to PayPal's valuation, long term.
But PayPal will remain a huge competitor in the space, and have just as good of a chance to be the partner of choice for a lot of these e-commerce companies.
In the short term I think the bigger risk is the macro environment tanking. That could certainly lead to PayPal falling a lot more. But if you feel good about where the broader market is at right now, I think the market has gotten overly bearish on PayPal for the time being.
@nathanworden yup, you’re right ~ does feel like the market discounting it more than it deserves. One think i’d add to you notes is the global scale that $PYPL has. Something other players don’t fully have yet.
I wonder if the market tips, do investors rotate into stocks like $PYPL that have taken a beating already and given up all thier gains for the year.