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PayPal Holdings, Inc. (PYPL) has experienced volatility in the market over the past year. Despite fluctuations in growth, the electronic commerce company continues to outpace the S&P 500. PayPal rose by approximately 122.5% compared to the S&P’s gain of about 51.2% over the past two years and rose on the WhaleWisdom Heatmap to a ranking of twenty-three.

PayPal operates an electronic payments system to facilitate convenient and secure e-commerce for small businesses and consumers. Customers can use its platform to both send and receive funds, connecting personal and business credit cards and bank accounts to the platform to ensure smooth online money transfers. Much of PayPal’s revenue is through transaction fees and service subscriptions. The company also offers financial services such as PayPal Credit, shipping services, and various e-commerce payment solutions beyond its PayPal platform, such as Venmo and Xoom.


Hedge Funds and Institutions Sell

Hedge Funds adjusted their portfolios, and the aggregate 13F shares held decreased to approximately $206.1 million from 211.9 million, a slide of about 2.7%. Overall, 46 hedge funds created new positions, 194 added to an existing one, 48 exited, and 191 reduced their stakes. Institutions were also selling and lowered their holdings by about 0.2% to $925.7 million.


Encouraging Multi-year Estimates

Analysts expect to see earnings rise, with increases in growth from 2021 to 2023 spanning from approximately 21.6% to 25.3% per year. These year-over-year estimated increases could bring earnings to $7.39 per share by December 2023, up from a predicted $4.72 and $5.91 for 2021 and 2022, consecutively. Year-over-year growth is also estimated to bring revenue to approximately $38.2 billion by December 2023, up from an estimated $25.8 billion in December 2021.

Rumors Cause Analyst Buzz

PayPal’s recent investment interest in Pinterest caused quite a buzz among analysts and investors, with rumors and business critiques flowing both before and after PayPal announced that it wasn’t pursuing an acquisition. Pinterest is a social media company known for image sharing through online pinboards, and some analysts such as Truist Financial’s Andrew Jeffrey could not find logic in the possible acquisition. The Wall Street Journal also shared that PayPal’s recent market decline could have jeopardized a potential deal since a purchase would involve its stock. In addition to the potential Pinterest acquisition, there has been chatter about PayPal’s use of customers’ financial data. PayPal is one of several companies selected for inquiries by the Consumer Financial Protection Bureau due to concerns about how technology companies use and protect financial data. While recent rumors may have clouded investor perception, it is clear that demand remains strong for secure, convenient electronic money transfer applications.

Cause for Cautious Optimism

PayPal is a company to watch, with a good track record of growth and a strong presence in e-commerce payment services. While hedge funds and institutions were selling shares, PayPal continued to outperform the S&P 500. New investors may be hesitant to acquire the stock, while current shareholders may be motivated to hold shares given optimistic future earnings estimates and PayPal’s potential for continued growth.

This entry was posted on Monday, November 1st, 2021 at 8:15 am and is filed under Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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