Should you buy or sell PayPal stock
On Tuesday, after the company released its most recent quarterly data, PayPal Holdings Inc. (NASDAQ:PYPL) saw its stock price collapse by more than 12 percent. Revenue and earnings for the company’s fiscal third quarter were disclosed after the markets had closed on Monday, exceeding analyst expectations by a significant margin.
The fintech company, on the other hand, provided conservative revenue and earnings guidance for the fourth quarter. As a result, analysts reduced their price targets for PYPL in order to account for the softer guidance.
PayPal reported non-GAAP earnings per share of $1.11 in the third quarter of fiscal year 2020, beating the average analyst estimate of $1.08, but revenue of $6.18 billion fell short of the consensus Street forecast of $6.23 billion, despite increasing by 13 percent from the same quarter in the previous year.
PayPal also provided revenue guidance for the fourth quarter in the range of $6.85 billion to $6.95 billion, which was significantly lower than the consensus estimate of $7.24 billion on Wall Street. Its earnings-per-share outlook of approximately $1.12 fell short of the average analyst estimate of $1.27 as well.
Is PayPal a decent investment at this time of year?
According to an investment perspective, PayPal shares trade at a high price-to-earnings ratio of 49.28 and a low price-to-earnings ratio of 34.32, making it a compelling option for value investors.
It becomes an intriguing investment opportunity for long-term investors when you consider the company’s profits growth forecasts of approximately 71 percent this year and an average of 24 percent per year over the next five years, among other factors.
Technically, Apple’s stock appears to have recently plummeted, completing a downward breakout from a descending channel formation that began earlier this year. Thus, the stock has fallen to oversold levels on the 14-day RSI, giving an ideal environment for a rebound.
Because of this, even though management provided cautious guidance for the holiday season quarter, it is possible that the company will beat expectations, which could serve as a catalyst for the recovery.
Profits might be targeted at approximately $212.38, or even higher at $222.81.
Is the current pullback a buying opportunity?
In summary, PayPal’s recent pullback comes before of a busy holiday season, giving it a compelling time to invest in the company.
As a result, with shares trading at appropriate valuation multiples, it may be a good opportunity to consider increasing your position after confirming by any of your entry strategies.
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Author: Simeon Bala
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