- PayPal stock price is stuck in a technical bear market this year.
- The company’s PYUSD stablecoin growth has accelerated this year.
- The stock will likely remain under pressure in the near term.
PayPal stock price is stuck in a strong bear market as concerns about its business remain. PYPL was trading at $44.20 on Friday, down by 52% from its highest point last year. This article explores whether it is a good buy as the PYUSD stablecoin growth continues.
PYUSD Growth May Not Offset Slowing Business
PayPal stock price remains in a bear market this year despite the ongoing PYUSD stablecoin growth. Data compiled by Artemis shows that the supply of the stablecoin has jumped to over $4.1 billion, making it one of the biggest coins in the crypto industry.
The data shows that the number of PYUSD transactions jumped to over 1.6 million, while the adjusted transaction volume jumped to over $11.6 billion. This volume is much higher than other stablecoins like Ripple’s RLUSD. It has over 72.4k addresses, a trend that may keep growing now that PayPal is expanding it to more countries this year.
Still, it is unclear whether the growing PYUSD momentum will help to save PayPal, a company whose core business is struggling, leading to the recent firing of the Chief Executive Officer (CEO). Its branded and unbranded businesses are facing substantial competition from other companies like Google, Amazon, and Stripe.
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The most recent results showed that growth of key metrics have struggled in the past few months. For example, its total payment volume rose by 9% to over $475 billion, while its revenue rose by just 3%. The adjusted free cash flow remained flat at $2.09 billion, with its active accounts remaining flat at 439 million.
This slot growth has led to a significantly weaker valuation, with its forward price-to-earnings ratio falling to 8.36, much lower than the five-year average of 22. The multiple is also lower than the sector median of 10.
This cheap valuation has made PayPal a potential acquisition target, with Stripe said to be considering placing a bid.
Still, it is unclear whether PayPal’s management will agree to a deal as the potential purchase price will be lower than the peak market valuation of over $300 billion. As a result, the management likely believes that it can engineer a turnaround over time.
PayPal Stock Price Prediction: Technical Analysis
The weekly timeframe chart shows that the PYPL stock price has remained under pressure in the past few weeks. It recently dropped below the important support level at $48.85, its lowest level in October 2023.
The stock has remained below the 50-week and 100-week Exponential Moving Averages (EMA), a sign that bears remain in control. It has also retested the key resistance level at $48.85, confirming a break-and-retest pattern.
Therefore, the stock will likely continue falling, potentially to the year-to-date low of $39.28. A move below that level will point to more downside.
The only way that PayPal’s stock rebounds is if there is an acquisition bid for the company.
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