PayPal stock price continued its strong downward trend this year as it crashed to its lowest level since October 2023. It has declined by 10% this year, underperforming the broader market, while the S&P 500 and Nasdaq 100 remain near their all-time highs. So, what’s next for the PYPL stock ahead of its earnings?
PayPal Has Become a Fallen Angel
PayPal, one of the largest fintech companies globally, has come under pressure in recent years. It crashed from a high of $300 in 2022 to the current $52 as its revenue and profitability growth faded.
This performance has mirrored that of other fintech companies. For example, Jack Dorsey’s Block is trading at $60, down from the all-time high of $288. Similarly, Fiserv stock has slumped from $238 in March last year to the current $63. Other top fintech stocks such as Upstart, Remitlu, and Shift4 Payments have declined.
READ MORE: Solana Price Forms a Rare Bullish Pattern as Transactions Hit 2.2 Billion
PayPal’s main challenge is that competition across its branded and unbranded business has continued in the past few years. It is also facing intense competition from stablecoins and buy-now-pay-later companies such as Affirm and Klarna.
PayPal stock price will be in the spotlight this week as the company publishes its financial results, which will provide more color on its business trajectory.
Analysts have low expectations about PayPal’s earnings. The average estimate is that its revenue will come in at $8.79 billion, up by 5% YoY, while the earnings per share (EPS) will be $1.29. PayPal has a long history of beating analysts’ estimates.
If these forecasts are accurate, its annual revenue will be $33.2 billion, up 4.6% YoY. Its first quarter guidance is expected to be $8.25 billion.
PayPal has several benefits, including the fact that it now pays dividends while continuing share buybacks. It has slashed its outstanding shares from over 1.168 billion in 2021 to 993 million today.
Additionally, the stock is trading below the average analyst estimate. The average forecast is $70, higher than the current $52, while its forward price-to-earnings ratio of 9 is the lowest in years.
PayPal Stock Price Technical Analysis
The daily chart shows that the PYPL stock price has been in a strong downward trend in the past few months. It has now fallen below the key support level at $56.5, its lowest swing in June-July 2024 and April 2023.
The stock has crashed below the 50-day and 100-day Exponential Moving Averages (EMA). It also slipped below the Supertrend indicator, a sign that bears remain in control. It also formed an inverted cup-and-shoulders pattern.
The Relative Strength Index (RSI) has declined to the oversold level of 30. Therefore, the most likely scenario is that the PayPal stock price rebounds, retests the key resistance at $56.5, and then resumes the downward trend.
READ MORE: Here’s Why Ethereum Price is Crashing Despite Soaring Network Metrics
